FX round-up: Pound reels after latest Brexit poll, Brazilian real down

An ORB survey conducted on behalf of The Daily Telegraph sent the pound reeling against the other major currencies on Tuesday.

The pollster found that the race between the camps in favour and against the UK remaining inside the European Union continued to be a dead-heat, with the ‘remain’ camp found to have 47% of the vote and the backers of the option to ‘leave’ coming in at 48%.

However, when adjusted for their ‘willingness-to-vote’ then the ‘leave’ camp was found to be leading by a comfortable seven percentage points.

Cable dropped 1.00% to 1.4158 as a result. Sterling was hammered versus the Japanese yen, dropping 1.50% to 160.12.
For its part, the single currency gained 1.10% against the pound to end at 0.7849.

Euro/dollar on the other hand finished the day relatively unchanged, edging higher by 0.06% to 1.1111, as traders waited on the US Federal Reserve’s eagerly awaited policy announcement and a fresh set of interest rate projections from its top officials the next day.

Traders were pricing in no chance of an interest rate hike by the Fed on Wednesday but they did see an 80% probability of another rate rise in 2016.

Dollar/yen was also on the move, despite a hint from the Governor of the Bank of Japan that further monetary stimulus – including a further reduction to already negative interest rates - might be in the pipeline.

“[The BoJ would] examine risks to economic activity and prices, and take additional easing measures in terms of three dimensions -- quantity, quality, and the interest rate -- if it is judged necessary for achieving the price stability target," the central bank said in a statement.

That saw dollar/yen slide 0.64% to 113.08.

As the rate decision Stateside loomed closer, emerging market currencies were also on the back-foot, although specific local factors were also cited as the immediate trigger for some of those losses.

Russia’s ruble declined 1.6% to 71.17 versus the greenback as crude oil futures slipped lower, whereas versus Brazil’s real the US dollar jumped 2.92% to 3.7764 on reports the country’s ex-president Lula da Silva might accept a Cabinet appointment; which some observers believed was meant to avoid his possible responsibility in a widening corruption scandal and investigation into alleged kickbacks.

South Africa’s rand fell 2.5% lost 2.5% after the country’s finance minister failed to meet a deadline to answer questions related to an investigation into the national tax agency.