FTSE has one of biggest 1 day rallies in History

U.S. Dollar Trading (USD) the rebound from Tuesday morphed into a fully fledged risk on rally with Stock markets surging around the globe. The main catalyst stems from receding brexit fears as US suggests that they are willing to enter into a bilateral trade deal with the UK. FX markets were a little more subdued but the US Dollar index was under pressure as the safe haven was sold.

The Euro (EUR) the Euro gained against the JPY and USD but fell against most other pairs with EUR/GBP giving back some of its brexit gains. EUR/USD broke above 1.1100 but gains have been slow. The Sterling (GBP) Positivity swept through the markets as brexit concerns took a back seat to bargain hunters. The gains on the FTSE100 have sent the stock index back to pre brexit levels with traders noting the weak GBP a key support. The GBP/USD itself managed to break Tuesday highs and popped briefly above 1.3500 but we have eased back to support at 1.3420. The outlook is more mixed now with the two day rally changing sentiment drastically.

The Japanese Yen (JPY) was sold nearly all day and we have ended at key resistance on the USD/JPY near Y103. The outlook is improving with all the Yen crosses rallying especially the commodity currencies which move closer with risk appetite. Expectations of new BOJ stimulus is growing and the rate of daily jawboning from the MOF/BOJ reaching deafening levels.
The Australian Dollar (AUD)​ was firmly on the front foot as both stocks and Oil rallied sharply. Resistance at 0.7400 gave way and we have grinded up to 0.7460 as we enter the Asian session Thursday. Topside is now firmly in view and with the RBA likely on hold next Tuesday there is little reason to stop the advance in the current mood. AUD/NZD is still below 1.0500 and has been stable for 2 weeks and is a good gauge to watch for signs of AUD outperformance.

Stocks Indices(DAX) tracked the FTSE higher to 9650 but is still 600 pips below pre brexit levels in what has been a bewildering response in the markets the last 4 days. Negativity has evaporated but it is still way too early to suggest brexit risks are not still very real. US Stocks (DOW) enjoyed massive gains and remained strong into the close with traders buying into the idea the brexit impact will be contained and not spill into global markets. How this plays out into FED expectations will be more interesting if the markets continue to rally into the July FOMC meeting.

Pairs to watch

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By Anthony Darvall (TonyD)
Last edited by Tony; Yesterday, 01:28 AM.