Kit Juckes, Research Analyst at Societe Generale, suggests that the recent economic events leaves markets subject to mood swings such as we’re seeing. Key Quotes “But a few points are worth observing: Firstly while equities and commodities are weaker, oil is holding up. I want to stick with longs in oil-sensitive currencies relative to China-sensitive ones. No change there and that keeps us well-disposed to CAD as long as rates remain on hold today. NZD shorts remain in palce even if we don’t really hold out much hope of further easing yet. Secondly, risk aversion is failing to support the Euro. It’s trading less like the yen amid the concerns about immigration and ‘Brexit’. That gives the ECB a greater chance of driving it lower if they deliver easier policy on Thursday. I’ve not given up hope of a test or even a break of EUR/USD 1.08, even though it will take Brexit to get EUR/USD to parity this year. Thirdly, the negativity surrounding the Brexit debate challenges that surrounding the US Republican nomination. BOE Governor Carney tried really hard not to take sides but simply suggesting that Brexit is a risk to financial stability upset some of the ‘Out’ side. ‘Brexit’ may make many people happy, but it is also likely to make them poorer. To point that out isn’t to take sides, any more than suggesting that GBP/USD will trade below 1.30 as a result of the UK leaving the EU is. Manufacturing production probably bounced in January, but any weakness would (again) have an outsized negative impact on the pound.” For more information, read our latest forex news.