ForexLive Asia FX news wrap: Boris’ Brexit backing bomb bashes British pound

Author: Eamonn Sheridan | Category: News

Forex news for Asia trading Monday 22th February 2016

Big Bad Boris' Brexit GBP bash:


Australia / New Zealand


The week ended with GBP being bid up on the deal British PM Cameron wrangled from Europe, but it started with a tumbling GBP as popular British politician Boris Johnson (Mayor of London) came out in support of Britain leaving the European Union.

There is going to be plenty more intrigue on this as Boris' remarks will be filtered through the perception of his desire for the top job in British politics; there is more to come indeed. Stay tuned for Mike and Ryan to weigh in (errr, literally .... now I'm in trouble ;-) ).

GBP was marked lower as the early FX market got going. Those who join me here at ForexLive each week for the early price movements will attest, I am a broken record in warning about the dangerously thin liquidity as the week opens, leaving currencies vulnerable to extreme movement on not a lot of volume. I stuck a chart of the early movements into this post, here, which gives a picture of the violent moves we can get on Monday morning even pre-New Zealand. And then it gets worse until it gets better when Tokyo, Singapore and Hong Kong eventually get active.GBP showed a bit of spunk, but 1.4300 proved too much for it on the bounce and it has since traded 1.4250/1.4300 ish as we await further action from Europe and the UK.

Gilts looked shaky, as did the FTSE futures.

Elsewhere, the yen lost ground today, a rallying Nikkei helping USD/JPY and some yen crosses higher. EUR and CHF lost a little ground (against the USD, they look like OK compared to GBP, of course).

AUD/USD and NZD/USD ticked higher, AUD toward recent highs yet again ahead of 0.7200.

China's USD/CNY fix continued volatile, the PBOc added a good chunk of liquidity to money markets via 7-day reverse repos, chatter continued surrounding the potential for an RRR cut, iron ore continued its rebound in Chinese markets, and Chinese stockmarkets added some fat. MNI's China Business Indicator came in at 49.9 in February (from 52.3 in January). Tumbleweeds on that one.

It wasn't a day notable for much in the way of news apart from Boris.

Regional equities:

  • Nikkei +1.16%
  • Shanghai +2.04%
  • HK +1.11%
  • ASX +1.04%

Water-cooler post of the day:

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