FOREX-Yen surges, sterling sees huge swings as Brexit fear slams markets
SYDNEY/TOKYO Sterling reversed sharp early gains while the safe-haven yen staged a rebound on Friday as confidence that Britain will remain in the European Union was badly shaken after early vote counts put the ‘Leave’ campaign in the lead.
The leave vote is on 50.7 percent, versus 49.3 percent for the remain vote, after 120 of 382 counting areas, plus partial BBC northern Irish figures were taken into account, according to Reuters calculation.
In a dramatic turnaround, the pound slid as far as $ 1.4000 GBP=D4, having earlier rallied to a 2016 peak of $ 1.5033. It has since found a very tentative footing just above $ 1.4244 .
“Markets are incredibly nervous now and it’s definitely tin hats time. If ‘Leave’ wins there will be carnage for cable (U.S. dollar/sterling),” said Joe Rundle, head of trading at ETX Capital.
Against the yen, it skidded to as low as 146.00 GBPJPY=R from an early high of 160.14. The euro rocketed to 79.85 pence EURGBP=R, reversing from just below 76.00.
“In our dealing room here, a growing number of people are now starting to expect Brexit,” said a U.S. bank trader in Hong Kong.
As Brexit anxiety grew, so too has demand for the safe-haven yen, which jumped on the greenback and euro.
The dollar dropped to as low as 103.01 yen JPY=, pulling well away from an early high of 106.875. The euro fell to 115.465 yen EURJPY=R from 122.000.
The Australian dollar, often sold off in times of heightened market stress, fell heavily against the dollar and yen. It shed more than 1.7 percent to $ 0.7481 AUD=D4.
“It’s very jittery and I suppose that’s very much going to be the order of the day until we see final results being announced,” said Robert Rennie, chief currency strategist at Westpac in Sydney.
(Additional reporting by Naomi Tajitsu in Tokyo and Rebecca Howard in Wellington, Editing by Eric Meijer and Sam Holmes)