It would appear ‘confirmation bias’ got the better of financial markets on Friday with most participants completely wrong – including myself – about the likelihood of a ‘Brexit’. In fact you could safely say the reason we saw such carnage on markets – GBP fell 12%, EURO Stoxx 50 fell 9% – was because very few in financial markets was expecting a Brexit.
What it all means is still yet to be seen with some reports suggesting massive petitions for a new ballot and Brits wanting to vote again with the new information they have. Whether we see a new referendum or the U.K Parliament follow through with the suggestion of leaving the EU remains to be seen. However what all this means for markets is further turmoil and uncertainty, and it there’s anything we know about markets, its that they hate uncertainty.
The next week or so will be volatile but we’d expect a bit of calm to slowly replace that volatility as the days go by. AUD/USD has held up reasonably well considering the falls on other currencies.
DATA RELEASES TODAY:
EUR – ECB President Draghi Speaks at 3.30am
AUD EXCHANGE RATES:
AUD/USD – 0.7432
AUD/GBP – 0.5528
AUD/EUR – 0.6724
AUD/NZD – 1.0460
AUD/JPY – 75.888
***Above rates are indiciative wholesale rates and intended as a quide only***
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Patrick Downes
Senior Corporate FX Dealer
Compass Markets
Contact Patrick for a quote on 0431 278 632
