Review of major currencies

USD - The dollar will strengthen its position as a safe haven, if the markets will return to the reaction to Brexit, but if the mood changes, USD may begin to decline, particularly against commodity currencies. The dollar should soon gain traction, or uncertainty will begin to grow rapidly. Also today comes an important report on the PCE inflation.

EUR - ECB and Europe need to do something with the banks to avoid a credit crunch and a cooling economy. Many overpraise the positive current account balance in Europe, considering that this is a plus for the currency, forgetting that, among other things, it is a sign of Europe's dependence on the world economy - in particular this applies to Germany with unprecedented high export intensity.

JPY - Yen can keep up with the dollar, if the current rise in risk appetite quickly fade away and turn into a new wave of sales of risky assets - but the real threat of intervention and incentives already looming on the horizon - perhaps the new measures will be taken after the elections to the upper house of parliament on July 10.

GBP - Pound may continue to decline, but, given the scale of the new range, consolidation could make it difficult for the bears to find the entry point. Yesterday's high at 1.3400 in the pair GBP/USD is the first pivot point after the Brexit.

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Brexit in cartoons

Social networks are always able to accurately reflect what is happening - briefly and precisely, of course Brexit topics is not an exclusion. I have collected for you 16 of the finest memes and cartoons on the subject. Enjoy!

1. "Stronger together".

2. "Eutanic".

3. "Britanic".

4. "Quibble".

5. "The Big Dip".

6. "Reality".

7. "Turnabout".

8. "The flag is enough".

9. "Grumpy".

10. "The Big Push".

11. "Avant-garde".

12. "Crossroads".

13. "Scobrout".

14. "...".

15. "But I'm staying".

16. "Brexit".

Britons want to repeat the referendum

The preliminary results of the British referendum made Friday black for pound. the British currency has fallen against the US dollar with 11.93% (1792 points) to 1.3226 until the completion of the counting of votes in all districts. Traders sold the pound all over the market, so it was most feverish.
The euro/dollar fell less than three times than the pound, with only 516 points to 1.0911. The growth of euro/pound eased the pressure on euro. Gold rose in price by 8.63%, to 1358.21. Oil fell by 3.46% to $ 47.52.
When it became known that 52% of Britons voted for the country's exit from the EU, in the forex market started a correction. GBP/USD registeres pullback with 38% (754 points), euro/dollar recovered with 50%.
Bloomberg reported that the Swiss National Bank in response to Brexit made an intervention in the foreign exchange market to prevent the Swiss franc strengthened against the single currency. The regulator has promised to monitor the situation and keep their presence on the market.
The referendum will be discussed a few more days. Volatility declined, but remains high enough for the major pairs. Do any forecasts on exchange rates at the moment is meaningless.
Central banks and finance ministers of the G7 plan to hold a meeting on Brexit. British Prime Minister David Cameron has announced his intention to resign in October.
Perhaps it is not worth rushing the Brexit?! The Britons signed a petition to reconsider the referendum. They need to collect 30 thousand more signatures, so the document would be considered in the Parliament of Great Britain. In the petition they want a second referendum for Britain's membership in the European Union, which would be held according to EU law. Where the voter turnout should be at least 75%, and for one of the embodiments voted not less than 60% of people.

Brexit countdown started

The market yesterday has completely ignored the speech of the Federal Reserve Janet Yellen, as the countdown for the British referendum already started. According to members of the election committee, the first results will start to appear on Friday morning, and finally all will be clear "for breakfast."
The prolonged waiting period is over, and yesterday it became quite clear how much the markets are zombified by the referendum: they did not even pay attention to the Yellen's speech to the Senate. In part, this indifference, of course, due to the fact that the Fed has lost confidence and made mistakes, as a result of which investors do not pay attention to the comments of the Central Bank, and monitor the incoming data.
The quote of the week belongs to Yellen, who said yesterday that "the Fed does not rely on a statement of intent", as, indeed, the markets. The head of the central bank is still optimistic about the US economy, but she is worried about the situation in China, as well as the prospect of Brexit; while in Bloomberg agency noted a slight downward change in forecasts for the economy.
According to some sources, the voting results will appear throughout the night and early Friday morning, while all regions are showing varying degrees of support for Brexit or staying in the EU. Of course, if the key regions demonstrate a clear desire to leave or stay, and the result will differ sharply from the expectations, the market will make some conclusions, that will lead to large-scale movements.
In addition, we should also consider the fact that the referendum is not binding, so even in case of victory of Brexit supporters, in the near future it could not change anything, as in accordance with Article 50 of the Lisbon agreement negotiations could drag on for two years. It is not excluded, that history will repeat itself with the referendum in France and the Netherlands on the EU Constitutional Reform in 2005, where people voted against it, but it still was held.
The Brexit scenario is almost completely excluded from the price, there is now more skewed towards the scenario that involves the preservation of the UK's membership of the EU. It will be worse if Brexit wins, especially if it's with a small difference - we'll have to bite our nails all night on Friday from tension. The probability of large-scale price volatility in the case of Brexit increased as the market has not really believe in such possibility. This means that it will be difficult to justify the reaction of traditional patterns of behavior during the key events of "sell on the rumor, buy on fact".

Calmness before the storm

On Tuesday, the weakening of the US currency has slowed against the background of market hopes that the result of the vote on Britain's membership will be positive to remain in the EU. The main beneficiary of the currency markets, as expected, was the pound, which flew for the first two days of the week with 4.21%, offsetting not only all fall from the beginning of the month, but adding another 1.53%.
Recent polls over the weekend showed that the balance in the forthcoming vote on Brexit leans in favor of the desire to remain in the EU, and that was reason enough to rally the sterling, as well as strong demand for risky assets. But despite this optimism, the uncertainty in this sensitive issue is still present, as the gap between the supporters of the status quo and Brexit is not too big and things can change on Thursday.
In my opinion, the activity in the markets on Thursday will slow down significantly as probable positive result from voting as a whole is played.
In general, if we look closely at the picture on the currency market, the local weakening of the US dollar late last week and earlier this week did not led to the formation of stable trends. Currency pairs with the USD simply added to the latter and moved to the opposite side of the already existing ranges. Counting on change of the overall picture in the near future is not justified, and the main to blame this situation is Fed, which does not give clear signals, that we should not be waiting better times for a growth of rates, bit still does not increase them, contributing to nervousness in the markets and an increased level of volatility.
As for today's speech from ECB President M. Draghi, it is also unlikely to report anything new and significant, which would cause the markets to be more energetic, so the main theme remains Brexit.

Forecast on EUR/USD for June 21

The last public opinion poll conducted in the UK on the topic of EU membership, has identified the majority of supporters of the preservation of the country's membership in the euro area. The results of this survey have weakened the US dollar, halting the downward trend of the currency pair, observed last week. For the past day, the euro/dollar showed high volatility, rising from the level of 1.1345, reaching the level of 1.1376, before rolling to 1.1302.
During the morning session, it is expected that the trading range for the pair will be in the range 1.1310 - 1.1350, with a possible decrease to the support line at around 1.1278. If the resistance line is broken, it is possible to decrease to the level of 1.1250.
If the mark of 1.1278 will withstand the onslaught of the pair, before the closing of the European session, prices will concentrate in the range 1.1280 - 1.1320.
In the afternoon, will be held a press conference by ECB President Mario Draghi and a speech of the Fed's Janet Yellen before the US Congress. These presentations will focus on the current economic situation in the euro area and the US respectively. After Draghi's speech, it is expected a high volatility of the currency pair EUR/USD and the periodic correction of the trend in the range of 30-40 points, depending on the press-conference results. It is possible that trading can end in a range of 1.1250 - 1.1300, fixing formed downtrend.

Markets are preparing for the British referendum

Toward the close of the week global markets come to life after a hectic week, and especially after Friday's "rally". The focus is the upcoming British referendum overshadowed the meeting of several central banks, economic releases and sentiment in the oil market. On Friday risky assets reduced force, the European government bond yields rose from record lows, the dollar has traded under pressure.

It turned out that the tragic events of Friday were the indirect cause of the abrupt change of sentiment in the global markets. The murder of a British MP Joe Cox stopped the campaign before the referendum and strengthen the hopes of saving Britain in the EU. Survey results still do not reveal a clear advantage for supporters or opponents of Brexit, which increased the degree of tension to the limit.

I still tend to favor, that Britain's membership in the Union will be saved. However, because of the uncertainty it makes sense to assess the potential extent of movement of cable in both directions. In case the status quo remains, the currency will show growth, however, the reaction will not be such a large-scale and long-term, such as in "exit" scenario. The victory of the opponents of "Brexit" will not cause significant changes. Markets will "rejoice" and soon will forget about this vote. And since the country's exit from the European Union will have a large-scale and long-term consequences, the downward pressure on the pound will be more pronounced and protracted. In this case, the euro also will fall as UK backdown would mark a violation of the integrity of the European region and may result a domino effect.

The fateful vote will take place on Thursday, June 23, and the results should be available on Friday morning. So the markets will have a tense week, the results of which will determine the mood of risky assets in the medium term.

Fed kept interest rates unchanged

The US Federal Reserve left interest rates unchanged on Wednesday and signaled that they still plan to raise rates twice in 2016, despite slow economic growth, which indicates a tightening of monetary policy in the coming years.
The decision of the central bank, however, is not very stable, 6 of the 17 members predict at least one more increase this year.
The sharp drop in hiring in the United States forced doubts about the strength of the labor market in the US, before the meeting of the Fed. Fed Chairman Janet Yellen acknowledged the need to see clear signs of economic strength before raising rates.

"We must be sure that there is enough momentum," said Yellen on a press conference.

The Fed also said the economy will grow only 2 percent this year and in 2017, and it is 0.1 percentage points lower than previous forecasts for each year.
Yellen also didn't gave clear signs whether the rates will be raised at the next meeting in late July or the central bank will wait to see stronger data and will decide at its meeting in September.

Shares of LinkedIn jumped 48% on news of the deal with Microsoft

Shares of LinkedIn Corporation (NYSE: LNKD) on the premarket soared more than 48% after Microsoft Corp. (NASDAQ: MSFT) announced that it acquires a social network for $ 26.2 billion.
Redemption fully in cash at the price of $ 196 per share, which is 50% higher than at the close on Friday night for $ 131.08.
Both companies stated that the agreement is final and LinkedIn will retain its brand and independence.
Jeff Weiner will remain Chief Executive Officer (CEO) of LinkedIn, reporting to the head of Microsoft Satya Nadella.
The companies said that the deal will be closed by the end of this year.

OPEC kept its forecast for global oil demand, reduced production in May

The Organization of Petroleum Exporting Countries (OPEC) has kept the forecast for world oil demand in 2016 at 94.18 million barrels per day. This is stated in the June OPEC report. Thе forecast in demand for oil in 2016 compared to 2015 is also maintained at 1.2 million barrels per day.
The oil market has become closer to the balance between demand and supply earlier than expected - due to unplanned supply disruptions from Canada and Nigeria, said OPEC in their statement. The organization expects that the oversupply will continue to decline.
Oil managed to close in positive territory last week and stay for Brent up than 50 per barrel, while the same level of US WTI was not kept. In addition to the wave of the strengthening dollar, which started on Thursday, the oil is under pressure also by the statistics.
Oil remains in an upward channel, and just returns to the levels at the beginning of the month as part of a short-term correction.

Trend growth in January can be considered broken after a decline to 48.00-48.50. A drop below would start a new downwards trend in the next few months. Important support levels in this way, able to trigger further collapse (if they would be overcomed) will become 50-day moving average (now at 46.90) and the 200-day (now at 42.90). We must not forget also about the level that separates bullish from bearish market. In the last week it was 53.03 level.
20% drop from the peak is at 42.40. This is the level of "withdrawing" of medium-term long positions. If oil loses 20%, it would no longer limited to these losses, and it will go further down.
Thus, the development of the downward trend can be separated into several stages with following important support levels: 48.00, 47.00, 43.00. The area between them seem more "soft" - without serious obstacles.

Euro/dollar consolidated at the level of 1.13

The eurobulls made their first attempt to go on plus, but it failed. After falling to the level of 1.1289 euro/dollar has updated the session low. Now, the European currency is making a second attempt to win back the daily losses and get out in the positive region. On Friday the euro against the dollar closed at 1.1250.
There aren't especially fresh reasons to sell the pair, as well as to stabilize, but the dollar is feeling quite confident. Next week will be at least tense. Good statistical data from the labor market last week supported the US currency. Statistics on Thursday showed that the number of claims for unemployment benefits for the week decreased to 264 thousand. The forecast was for 270 thousand. Optimists in the dollar cheered. Step by step, the the market interest to the US currency is returning, which is logical in the run-up to the June meeting of the US Federal Reserve.
Now investors preferences are confused about each other. Based on market futures on Fed's decision on interest rates, 2-3% expect its growth on 15 June. Another 23-24% believe that it is more logical to increase the rate in July, to have time to gather all the necessary confirmation in the form of statistics and other data. In general, the latter hypothesis looks reasonable, especially since the labor market gives good signals.

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Morgan Stanley: USD/JPY can break through 105.00 and drop to 98.00

The fundamental basis of trade in the forex market currently remains negative for risky assets. This allows to count on further strengthening of the yen, write analysts at Morgan Stanley. Japan is trying to increase its fiscal stimulus.
The yen strengthened on behalf of cash flows related to hedging or insurance against the risk of unfavorable changes in the exchange rate. Here the difference between real interest rates in the US and Japan, in fact, plays an important role. As well as the set of tools in the arsenal of the Bank of Japan to weaken the yen seems scarce, there is a significant risk that the Japanese currency may strengthen significantly from current levels, they added.
The position of the bank suggests a bullish trend for the yen amid expectations of further reducing appetite for risky assets. The bank believed that the level of 111.50 seems durable and is currently unbreakable resistance.
Currently, the bank analysts expect that the support level at 105.00 on USD/JPY will be breached and the price will head towards the global target of 98.00.
According to them the yen could succeed strengthening before the Bank of Japan begins to review the possibility of progressive monetary and credit policy, which will go beyond the current strategy of quantitative easing.

BNP Paribas: EUR/USD may return to 1.16

The tone of the last speech of Janet Yellen as a whole remains optimistic, however, she did not fail to note that the report on the labor market in the US on Friday has raised new questions about the country's economic prospects.

Strategists of BNP Paribas doubt that after unemployment report on Friday will be a recent increase in US interest rates by FOMC in June or in July. Short-term US interest rates may continue to decline if the following data are weak.

That leaves the dollar vulnerable and at the same time demand for USD/JPY will likely be supported by the taking of new stimulus measures in Japan, EUR/USD is on its way to return to 1.16 dollars. The next important statistics for the US is next Tuesday when there will be published the figures for retail sales in May.

The pound jumped 1% on the results of another poll on Brexit

On Tuesday, the pound jumped by about 1% against the dollar after an opinion poll in the UK showed a slight advantage of the supporters of the country to remain in the European Union.
GBP/USD pair peaked at 1.4460 the day before, and is now trading at 1.4551, up with 1% today.
Sterling also strengthened against the euro, EUR/GBP pair fell 0.98% to 0.7787.
The pound strengthened after an opinion poll published in the "Times" magazine on Monday showed that the number of EU supporters has exceeded the number of voting for Brexit.
At the same time, another poll, published in Monday's "Daily Telegraph" showed that most are going to vote for Brexit on the Referendum.
Meanwhile, Betfair data on Tuesday showed that 72% of Britons would vote for Britain to remain in the block of 28 countries against 70% earlier in the day.

Dollar remains near one-month lows against rivals

On Tuesday, the dollar fell against other major currencies after on Monday Federal Reserve System Chairman Janet Yellen disappointed markets with the fact that in her speech she did not mention the timing of the next rate raise. Speaking on Monday, Yellen said the central bank does not intend to raise interest rates, while the US economic outlook remains uncertain. Yellen also expects the US recovery will continue, but did not specify the possible timing of the next rate hike. Weak data excluded the possibility of increasing of the rate by Fed in June, so investors have removed their expectations at a later date before the end of this year. The EUR/USD is stable at 1.1347 near three-week high 1.1392 on Monday.

Australian dollar has received support

Since the beginning of the last week AUD was showing sensitivity to Australian statistics - we could sense market uncertainty about the future of monetary policy on the continent. So the Building Approvals index, which came out better than expected - 3.0% (vs. forecasts for  -3.1%) led to the growth of the Australian dollar by 25 points.
The growth of the economy for the first quarter also supported the Australian dollar, data came out higher than expected: 1.1% compared with 0.8% forecast. Data registered record high.
If we take an annualized basis, the Australian economy has added 3.1% compared to expectations of 2.8%. Exports rose by 4.4%, which added 1% to GDP growth.
Such indicators may affect the RBA in their future plans of easing monetary policy through lower interest rates.
Reverse effect on the Australian dollar may have only USD with its labor market data, released on Friday.

"Kiwi" is trying to fly!

It lives in New Zealand, such flightless kiwi bird. In honor of it on the trader slang called national currency: "kiwi» = NZD. While the majority of the commodity currencies are experiencing some pressure due to a general strengthening of the US dollar and a slight rebound of oil prices from peaks, our kiwi bird tries to fly.
Since Tuesday NZD/USD pair is trading at the support of the moving averages of 20 and 50 periods and tests the resistance around 0.6805. Index Stochastic Oscillator is in the overbought zone (above 65), but shows no signs of reversal.
While the support at 0.6735 is not broken, the pair opened up to the way towards 0.6845 and further to 0.6890-04 resistance zone. Indicators in H4 at the moment give buy signals. Recommendations for today: buy at the current quote [0.6802/06], but, preferably, not higher than 0.6810 (very aggressive) with the aim of 0.6835 near and more distant in the area of ​​0.6890.

The third wave of devaluation of the yuan is in full swing

It seems that the world is on the verge of another currency "war". Chinese Yuan in early summer renewed the lows again in pair with the US dollar, of course, not independently, but under the strict guidance of the People's Bank of China. China's regulator returned to its controlled currency devaluation to reduce the negative impact of the massive outflow of capital from the country. During 2015 China lost about $500 billion, about the same number are expected in the current year. This is "hot" money, which are present in some amount in each developing economy, but returned to the owner with the expansion of the spread in interest rates. Now that China stimulates its economy, while the US Federal Reserve is ready to toughen the terms of monetary policy, the currencies of developing economies may again come under pressure.