Markets have been pretty quiet overall today relative to the big moves seen earlier in the week. Having adjusted to reflect changing expectations, traders now appear to be in wait and see mode ahead of Thursday’s big Brexit referendum, reluctant to overcommit and get too far out on a limb in case they have to reverse course. Polls continue to suggest a dead heat with an Opinium poll putting Leave ahead 45%-44%, so the results could kick off significant volatility and trading opportunities. Crude oil had a bearish reversal today. WTI started the day off strong on the back of a big drawdown in API inventories but then gave it all back on a smaller than expected DOE drawdown. WTI remains stuck in a $48.00-$50.00 range. Today also brings flash PMI reports for June which could attract attention, particularly the results for the US with traders still trying to figure out what to make of the US economy between the soft nonfarm payrolls reports, Bullard’s sudden dovish shift and Yellen’s middle of the road keep her options open stance. JPY and SGD could be active today as well around flash PMI for Japan and consumer price inflation for Singapore. Brexit Trading Preview The Brexit referendum results have had a significant impact on trading in recent weeks and may drive markets swings in the coming days as traders digest the decision. Action may be focused on Sterling (GBP), particularly relative to the Japanese Yen (JPY), Euro (EUR) and US Dollar (USD). Since the start of the year, GBPUSD has been trading in a wide range between $1.4000 and $1.4800. The recent rally from the bottom of this range to the top reflects a swing in sentiment expecting a Leave win to one expecting the UK to vote to Remain in the EU. It would appear that GBPUSD has priced in the odds of a vote to Remain at $1.4000 0%, $1.4200 25%, $1.4400 50%, $1.4600 75% and $1.4800 100%. Once the results are out, GBPUSD could trade to either end of this range with the potential for an overshoot toward the $1.5000 round number to the upside and the February low near $1.3850 to the downside. Despite forecasts of even more extreme swings from some quarters, these appear unlikely because the higher the volatility the higher the potential central banks would step in to intervene. In recent days, the ECB, Bank of Japan, Fed, Riksbank, Swiss National Bank and others have indicated they are ready for the results and prepared to step in and stabilize markets if needed. The last thing these countries want is a big GBP devaluation driving up the valuation of their own currencies, exporting deflation to their countries and undermining their own monetary stimulus programs. Defensive havens like gold, JPY, USD, CHF and bonds may be active reflecting traders’ expectations following the vote. If traders become fearful, capital could flow out of stocks and other risk markets into defensive havens driving them higher. On the other hand, a relief rally like the one markets staged earlier this week could send stocks higher and those markets lower. Key levels include Note that while a Leave vote could weigh on the FTSE, if the pound were to crash it actually could send the FTSE sharply higher because it would make the shares of UK based multinationals suddenly much cheaper than their peers. Current trading and betting suggests that traders are pricing in about a 75% chance of a Remain win regardless of how close the result may be. With many polls indicating a very close race right to the wire, there is still a chance that Leave could win, with some people forecasting that the voter turnout may end up deciding the result. Based on current trading, a Leave win would come as a slightly bigger surprise than a Remain win so we could see more volatility and larger moves on a decision to Leave than one to Remain which was priced in earlier this week. It’s also possible that with the race so close, we could still see significant swings in both directions in the coming days. Corporate News There have been no major announcements after the US close today. Economic News Significant announcements released overnight include: US DOE crude oil inventories street (1.5 mmbbls) US DOE gasoline inventories street (1.0 mmbbls) US FHFA house prices 0.2% vs street 0.6% US existing home sales 5.53M vs street 5.55M Canada retail sales 0.9% vs street 0 8% Canada retail ex auto 1.3% vs street 0.7% Upcoming significant economic announcements include: (Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore) 12:00 pm AEST Japan flash manufacturing PMI previous 47.7 3:00 pm AEST Singapore consumer prices street (0.8%) 3:00 pm AEST Singapore core CPI street 1.1% vs previous 0.8% 7:00 am BST UK Brexit referendum polls open 8:00 am BST France flash manufacturing PMI street 48.7 8:00 am BST France flash service PMI street 51.6 8:30 am BST Germany flash manufacturing PMI street 52.0 8:30 am BST Germany flash service PMI street 55.0 9:00 am BST Norway Norges Bank interest rate 0.50% no change expected 9:00 am BST Italy industrial sales previous (3.6%) 9:00 am BST Italy industrial orders previous 0.1% 8:30 am EDT US jobless claims street 270K 9:45 am EDT US Markit flash manufacturing PMI street 50.9 10:00 am EDT US new home sales street 560K vs previous 619K 10:00 pm BST Thu UK Brexit polls close, no exit polls, counting starts 5:00 pm EDT Thu 7:00 am AEST Fri CMC Markets is an execution only service provider. 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