The prospect of a Brexit is driving market fears and is having an incredibly volatile impact across asset classes. Increased attention is now being given to individual opinion polls and the markets are spiking higher and lower.

1. Weekly Outlook
Friday 17th June with Richard Perry, Market Analyst
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WHEN: Fri, 24th June (likely to be early morning)
LAST: n/a
FORECAST: n/a
Impact: The opinion polls have been tightening for the
past few weeks and for the first time during the
campaign the Number Crunch Politics poll of polls is
now calling a Leave victory. The betting markets are
still calling a marginal Remain victory. The big unknown
factor in the situation is still the large proportion
undecided voters and even within that it is difficult to
know the voting intentions of the “shy Tories” but there
is also the “silent status quo” voters. Turnout will be key
too. This event has the potential to be the biggest
market volatility result of the year.
Key Economic Events
Date Time Country Indicator Consensus Last
Tue 21st Jun 10:00 Eurozone German ZEW Economic Sentiment +3.0 +6.4
Tue 21st Jun 15:00 US Janet Yellen testifies to Senate n/a n/a
Wed 22nd Jun 15:00 US Existing Home Sales 5.50m 5.45m
Wed 22nd Jun 15:30 US EIA crude oil inventories -0.93m
Thu 23rd Jun 09:00 Eurozone Flash Composite PMI 53.0 52.9
Thu 23rd Jun 14:45 US Flash Manufacturing PMI 50.5
Thu 23rd Jun 15:00 US New Home Sales 560,000 619,000
Fri 24th Jun n/a UK EU Referendum RESULT Uncertain n/a
Fri 24th Jun 09:00 Eurozone Ifo Business Climate 107.4 107.7
Fri 24th Jun 13:30 US Durable Goods (core MoM) +0.2% +0.4%
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1N.B. Please note all times are BST (GMT+1), data source Reuters
Macro Commentary
With less than a week to go, no-one knows the outcome of the UK’s EU Referendum. Opinion polls have tightened
recently but it comes with great surprise that with just days to go, the Leave campaign would be leading in the polls.
The latest reading from the Number Crunch Politics poll of polls suggests and the markets are duly worried.
However, in what has become a rather acrimonious campaign from both sides (at which no-one from either side will
come out with any real credit) the situation has hit new lows, with the murder of an MP which has led to the
temporary suspension of campaigning. Whilst the full motives behind the brutal act remain to be seen, with people
looking to politicise the situation after the alleged murderer was heard shouting “Britain first”, at this stage it is very
difficult to know the true impact on the campaign. Market reaction engaged a risk recovery amid the perception that
it would harm the Leave campaign, but into the final few days of campaigning the result is still completely up in the
air. Volatility is high and there is a degree of illiquidity with traders unwilling to take a view. Expect some profound
moves seen in Sterling/Dollar, Euro/Sterling, Gold and the FTSE 100, amongst others before and after the result is
known. Trading on Friday morning will be incredibly unpredictable as European traders try to make sense of it all.
Being such a binary event, I can only say good luck to everyone as it promises to be one hell of a ride.
Must Watch for: UK’s EU Referendum Result
UK 10 Year Gilt yield
Would a Brexit send yields even further to record lows?

2. Weekly Outlook
Friday 17th June with Richard Perry, Market Analyst
Foreign Exchange
How will forex markets look in the event of a Brexit? The UK leaving the EU will create huge uncertainty for the
UK economy and could even push the country into recession. Sterling will fall, and as the Bank of England
accepts, the decline could be sharp. With EU exports into the UK amounting around 7% of its total, and the
Eurozone already fighting its own sclerotic economic recovery of slow growth and zero inflation, a Brexit is also
likely to create a negative shock for the EU as well. Therefore the ECB could need to loosen monetary policy
further. The Euro is also therefore likely to be a casualty. However the safe haven currencies could benefit in
this scenario. The yen is the prime candidate for outperformance here, being the market’s go to safe haven
currency of choice. Additionally though, the US dollar is likely to perform strongly too. In the past week, even in
the face of what was expected to be a dovish Fed, the dollar has been performing well as expectations of a
Brexit increased. The dollar is also seen as a safe haven and this will act as a drag on commodity currencies.
So if Britain votes to leave expect Sterling/Dollar to be hit hard, whilst Euro/Dollar will also come under
considerable downside pressure too, whilst the yen strength would also drag Dollar/Yen lower. Euro/Sterling will
be a more difficult play but can be expected to rally on a Brexit, but to be far more muted than other forex pairs.
WATCH FOR: Yellen speaking before Congress on Tuesday and Wednesday will impact on markets but
the fears over Brexit will be the crucial factor for the week
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2
FX Outlook
GBP/USD
Watch for: Volatility will be huge this week as
Brexit fears dominate
Outlook: If the question is when do I think that
Cable will be in one week’s time, I would have to
answer with a spread that is normally only seen
when looking to exchange currency at the
airport! The binary decision of the UK
referendum means that Cable could be deep in
the $1.3s (or even a “2” big figure handle)
immediately in the aftermath of a vote to leave,
or it could have spiked into the $1.5s on a
remain. I hope that you can forgive me for saying
that the technical indicators do not apply in this
situation, only sentiment from the opinion polls in
the run up and subsequently the result.
Interestingly though $1.4330 could become a bit
of a watershed for the market, so watch that in
the coming days. Elevated Brexit fears before
Thursday could see a test of $1.3833 the year
low.
EUR/USD
Watch for: A less volatile play on the UK’s EU
referendum
Outlook: Perhaps for a less volatile play on the
Brexit decision, perhaps look at EUR/USD which
is likely to play out some similar traits but with
less violent swings. The big uptrend since the
November low remains intact for now and is now
protecting the long term pivot band
$1.1050/$1.1100 which once again was used as
support at the end of May. A UK vote to leave
the EU would drive euro weakness and dollar
strength and put pressure on the pivot band. A
breach of $1.1050 would open $1.0800, but
dollar weakness on a remain could retest the
range his again.

3. Weekly Outlook
Friday17th June with Richard Perry, Market Analyst
Equity Markets
Risk appetite has been scarce in recent days. Markets have been fearful of why the Fed have chosen once
more to hold off from hiking interest rates (and seemingly making a next rate hike unlikely at least until
September or even December). However the big scare for investors is the possibility of a Brexit. With Treasury
yields falling to record lows it is clear that investors are after safe havens at the moment and this is not a happy
environment to be buying equities. Although there has been some minor respite on Friday, the next week of
trading in the run up to the EU referendum is unlikely to be great for equity markets either. However, it is
interesting that the DAX remains a relative underperformer of the major markets amidst the selling pressure. It
is a market that is closely linked to exports and growth, whilst this is currently a world where trade is under
pressure and growth indicators are in decline. The FTSE 100 though will be a big focus for traders and FTSE
100 options volatility is around year high levels (something not mirrored on the S&P 500’s VIX). Forecasts from
some investment banks (notably UBS) have suggested that the FTSE 10 could fall back towards the year lows
in the event of a Brexit (which is around 5500), however, with a Remain victory the recent selling pressure
would be unwound and there could be a rally back towards the April highs above 6400. The S&P 500 continues
to be a relative outperformer compared to the European markets, partly due to its perceived insulated position
from a Brexit.
WATCH FOR: Market sentiment will be driven by the Brexit opinion polls, whilst US traders will be
focused also on Yellen’s testimony
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3
German DAX
Watch for: Expect the DAX to track the FTSE in
the referendum result
Outlook: The technical outlook on the DAX has
deteriorated massively in the past couple of
weeks and depite the volatility surrounding the
will they/won’t they of the Brexit decision, the
DAX is still an underperformer. I would expect
the DAX to at least track the FTSE 100 in any
decline therefore and a UK vote to leave the EU
would see a retest of the February lows at 8699
fairly quickly. There is already the technical
momentum gathering pace for the sell-off but the
old support of 9737 could be a basis of
resistance in the coming days a more than likely
to see a retest of the 9433 support in the run up
to the vote as fear takes over again. A retest of
10,365 could be seen on a UK vote to remain.
FTSE 100
Watch for: Depending upon the outcome of the
EU referendum either year highs or year lows
could be seen in the coming weeks
Outlook: After next Thursday the UK will either
remain in the EU or it will begin the process of an
Brexit. For the FTSE 100 this means that it is a
binary decision that could either drive stocks
higher (on a vote to remain) or lower (on a
Brexit). Market forecasts have tended to put the
outcome as either testing the key resistance of
6427/6487 (on a Remain) or a test of the big
February low at 5500 (on a Leave). How long is
difficult to ascertain but sell-offs tend to be
quicker than market rallies and I would hazard a
sell-off within week or two, but a rally more
considered over a number of weeks/months.
Index Outlook

4. Weekly Outlook
Friday 17th June with Richard Perry, Market Analyst
Other Assets: Commodities & Bonds
The run higher on gold last week was fuelled by the double impact of a dovish FOMC monetary policy and the
market’s increased fears over a Brexit. It would appear though that despite the improved risk outlook on Friday,
with the dollar weakness still has the potential to continue to underpin gains on gold. Brexit will remain a key
market risk in the next week and this should maintain support for gold. However with the perceived safe haven
status, gold would be at risk of a sizeable correction should the UK vote to remain in the EU. A Brexit would
drive gold back through Thursday’s high of $1315.50 and re-open the key $1345 high from July 2014. The oil
price bull run has come under considerable threat with the growth downgrade from the Fed and Brexit fears. It
could be that a Brexit would confirm a de-railed oil rally, with the technicals increasingly corrective too now.
The recovery on government bond yields could prove to be short lived if the fears over a Brexit strengthen once
more next week, whilst the consistent decline on the yields could reach a new phase of downside pressure
should the UK vote to leave the EU. The German Bund yield would be quick to move negative again although
with the ECB’s extended bond buying program, this is likely to be seen in any case. In 2012 amidst the
Eurozone debt crisis the US 10 year Treasury yield hit a low at 1.381%, which would likely be retested on a
vote to Brexit.
WATCH FOR: Brexit opinion polls and huge volatility with the result on Friday
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4
Gold
Watch for: The key safe haven would be
underpinned by a Brexit
Outlook: Huge gains could not be held on to last
week as a potential false upside break formed a
high at $1315. Technicals are stuttering but the
support is still intact for now and the prospect of
a significant flight to safety on a UK vote to leave
the EU could mean that significant gains could
be seen. A closing breach of $1315 would open
the next resistance at $1345. This is one of the
markets giving a binary move: huge gains on a
Brexit, whilst seeing a significant correction on a
vote to remain. Support is initially around
$1245/$1260, with $1200 not to be ruled out in
the event of a significant recovery in appetite for
risk.
Markets Outlook
Brent Crude oil
Watch for: Uptrend is intact for now but expect
downside if a Brexit is seen
Outlook: The positive technical outlook has
been asked some serious questions in the past
week, but it is interesting that whilst the big
uptrend has been decisively broken on WTI, the
trend channel remains intact on Brent Crude.
This trend channel is clearly now dependent on
the UK voting to remain in the EU as the knock
on impact on the global economy could be huge,
knocking economies and regions back into
recession and the oil price would certainly take a
hit. Thursday’s support at $48.35 is initially
supportive but the major technical support is the
May low at $43.35, below which confirms a
major breakdown.

5. Weekly Outlook
Monday 17th June with Richard Perry, Market Analyst
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5
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