Scotland has been the most talked about country in the world in recent weeks and today its residents have the chance to make one of the most important decisions in not only their history, but potentially the history of many other semi-autonomous parts of the world. Waiting in the wings are other regions across Europe looking on at Scotland with envy and if the yes vote wins today (result to be announced in the early hours of tomorrow morning), parts of Spain (Catalonia), Belgium (Flanders) and Italy (South Tyrol) will be able to further their argument for breaking away to form new independent states.
Whatever the result the most important thing for traders and investors in the short term is what affect it’ll have on sterling and more on that is available from yesterday’s Insight “Sterling’s Reaction to Scottish Yes or No Vote”. This morning sterling is settling itself with perhaps a hint of bias towards the no vote with EURGBP drifting lower to 0.7900 overnight. The FTSE 100 is also taking a less cautionary stance as we expect it to open higher this morning by some 10-15 points.
Overnight the FOMC didn’t become too hawkish as they left “considerable time” in their statement in reference to keeping rates on hold beyond the end of tapering, but this hasn’t prevented the dollar from pushing higher with USDJPY once again the outlier touching a high of 108.87 earlier this morning, a level not seen since September 2008. This move has become very significant now as it has firmly broken out above the very long term downward trend in USDJPY that commenced back in 1998.
As well as all eyes being on the Scottish referendum we get UK retail sales this morning which are expected to rise year-on-year and then later there’s US housing starts as well as the weekly initial jobless numbers expected to come in at 305k.