From Morgan Stanley

FX Morning
June 29, 2016 06:41 AM GMT
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Correction versus trend. The S&P 500 has closed its Monday’s opening gap, commodities have rallied over the past couple of days and even GBP has moved reluctantly higher. Linked to this correction is the typical post event news flow suggesting that things may be not as bad as originally digested on Friday when it became clear Britain voted to leave the EU. Bloomberg is reporting booming London tourism as foreign visitors take advantage of the cheap exchange rate and there has been no sign of a domino effect cascading through global balance sheets. China’s stock market showing the world’s best performance within the post Brexit world leaves many with the impression that Brexit is a local event with little or no long-term implications felt outside of Europe. China seeing the offshore RMB surging reducing the onshore-offshore spread adds to investor calm this morning. The tragic terrorist attack by Isis, this time hitting the International Istanbul Airport and killing at least 36 people, has not pushed investors back into a risk selling mode this morning.

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