Sterling and the AUD at their highest correlation in nearly four years – BBH

By FXStreet Research Team at BBH, have argued that the place to look for investor anxiety about the UK referendum is not the spot market but the options market.

Key Quotes

“At the start of next week, it is a month away. The one-month volatility and risk-reversal will replace the two-month tenor as the indication of the cost of insurance. More polls have come out, and the one that has captured the market’s attention (sponsored by the Telegraph) found a seven-point swing toward the “Remain” camp over the past month. That puts the status quo in a 55-40 lead.

Some press accounts attributes sterling gains to this poll, but this seems a bit selective use of evidence. The ICM conducted two surveys one by telephone and one online. This produced conflicting results. By telephone, “Remain” was ahead 47-39. Online participants gave Brexit the lead 47-43.

Also, a seven point swing is large in a month and may be a statistical quirk. Other surveys need to confirm that the undecideds are breaking toward the status quo, as is typically the case, to validate the Telegraph’s results. We note …read more

Source:: FX Street