Currency Markets May Pause to Digest After Brexit Fireworks

Aftershocks from last week’s Brexit-inspired volatility continued to define currency market price action at the start of the trading week. The British Pound continued to underperform, losing around 2 percent against the majors. The sentiment-linked Australian, Canadian, and New Zealand Dollars traded downward while the safe-haven US Dollar and Japanese Yen dutifully moved in the opposite direction.

With the first act of the “Brexit” drama now behind them, the markets now face a long and uncertain path toward reckoning with the aftermath. This is likely to be measured in months and years, not hours and days. In the immediate term, this may translate into a short digestive pause after last week’s explosion of volatility. Still, European and US stock index futures are pointing sharply lower in late Asian trade, warning that risk-off momentum aims to carry forward.

Asia Session

European Session

Critical Levels