June 29th 2016: Markets Retreat Into Their Shell

• After a positive response yesterday, markets have retreated back into their shell, with ‘risk-off’ currencies in favour. The British pound is on the back foot, but so far holding the gains made yesterday. This comes after David Cameron’s speech in Europe last night which pointed to further uncertainty in forthcoming negotiations.

• Elsewhere, the yen is soaking up currency inflows. The GBP/JPY is selling off heavily, but the EUR/JPY and USD/JPY are not far behind.

• The US dollar index is back on the rise as investors look for safer homes for their cash.

• Elsewhere, gold is nudging back higher.

• Coming up today we have Spanish Flash CPI at 08.00.
• Following this, we have UK net lending to individuals at 09.30.
• From 13.30, we switch to North America for US core PCE price index and personal spending, followed by pending home sales at 15.00 and crude oil inventories at 15.30.
• Then at 15.30, we have crude oil inventories.
• We also have the day two of the EU economic summit.

Trade Idea: 

• The pound has failed to roar in response to Friday’s sell-off and while in the medium term, the pound may well recover, in the short term we are likely to see further volatility in both directions.

• A good way to play this is a LOWER trade predicting that the GBP/USD will close below 1.32 in 14 days for a potential return of 172%.

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