Market Roundup
• Latest ICM poll shows 47% of Britons would vote to remain in EU, 53% would vote to leave -Guardian
• ECB’s Hanson: Monetary policy to be driven by inflation expectations.
• EZ long-term inflation expectations, 5-year/5-year breakeven forward falls back to record low of 1.36%.
• Bank of Tokyo-Mitsubishi UFJ informs Japan’s finance Ministry that it will cease to serve as market maker for Japanese Gov’t Bonds- Nikkei.
Looking Ahead - Economic Data (GMT)
• 22:45 New Zealand May Food Price Index, no forecast, prior 0.3%
• 01:00 Australia June Consumer Inflation Expectations, no forecast ,prior 3.2%
• 01:30 Australia May NAB Business Conditions, no forecast, prior 9
• 01:30 Australia May NAB Business Confidence, no forecast, prior 5
• 02:00 China May New Yuan Loans, forecast 750.0b prior 555.6b
• 02:00 China May M2 Money Supply y/y, forecast 12.5% prior 12.8%
• 02:00 China May Outstanding Loan Growth, forecast 14.2% prior 14.4%
• 04:30 Japan Apr Industrial Output, no forecast, prior 0.3%
• 04:30 Japan Apr Capacity Utilization, no forecast, prior 3.2%
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1229 levels and currently trading at 1.1290 levels. The pair has made session high at 1.1302 and hit lows at 1.1236 levels. Euro initially declined against the greenback in the European session. But later in the US session, euro rebounded against the US dollar, as uncertainty over the outcome of this week's Federal Open Market Committee policy meeting added to market worries, though the U.S. central bank is expected to leave interest rates unchanged. A much weaker-than-expected U.S. employment report for May drastically reduced the chances of the Fed hiking rates either in June or July. Uncertainty over this week's U.S. Federal Open Market Committee policy meeting has pressured oil, though the U.S. central bank is expected to leave rates unchanged. The Fed, Bank of England, Swiss National Bank and Bank of Japan will all meet this week, and are expected to hold monetary policy steady.
GBP/USD is supported in the range of 1.4110 levels and currently trading at 1.4229 levels. It reached session high at 1.4326 and hit low at 1.4110 levels. Sterling slipped to hit an eight-week low against the dollar on Monday, as fears about Britain exiting the European Union weighed on the pair. Many analysts reckon a vote to leave on June 23 would jolt Britain's economy and send sterling tumbling by 15-20 percent, while a vote to stay would be likely to drive the currency sharply higher. All of which means traders are braced for more volatility in the coming days. Sterling, has been dominated by Brexit concerns since late last year, although other currencies have until now appeared largely protected against worries over Britain's EU future. Sterling, which was down broadly, also fell to a three-year low of 149.50 yen. The pound last traded down 0.7 percent at 151.71 yen. Against the dollar, sterling fell to an eight-week low but subsequently recovered to trade up at $1.4207.
AUD/USD is supported around 0.7357 levels and currently trading at 0.7386 levels. It hit session high at 0.7411 and made session lows at 0.7377 levels. The Australian dollar slightly retreated against US dollar on Monday as investors avoided taking major positions amid Brexit fears and ahead of key central bank meetings this week. The U.S. dollar was under pressure after risk-averse investors piled into the safe-haven yen as growing concerns about the June 23 referendum on Britain's membership in the European Union, and a mass shooting in the Orlando, Florida on Sunday dimmed the mood. The U.S. Federal Reserve and the Bank of Japan also hold their respective policy meetings later this week, with particular attention on the Fed's policy after poor jobs report doused expectations of an imminent rate hike. The Australian dollar benefited last week when the Reserve Bank of Australia surprised markets. The Australia central bank held the rate at 1.75 percent and omitted a clear easing bias in its monthly policy review statement.
USD/CAD is supported at 1.2748 levels and is trading at 1.2804 levels. It has made session high at 1.2826 and lows at 1.2748 levels. The Canadian dollar weakened to one-week low against its U.S. counterpart on Monday as oil fell and risk appetite deteriorated amid concerns Britain may be on the verge of leaving the European Union following a June 23 referendum on its membership, an outcome that could adversely impact the global economy. Oil prices fell, weighed down by gloomy economic prospects in Europe and Asia. U.S. crude prices were down 1.39 percent to $48.39 a barrel. Global stocks were sold off, adding to headwinds for the risk-sensitive commodity-linked Canadian dollar, after betting odds showed the probability that Britain would vote to leave the EU had increased sharply to 36 percent, the highest level since the June 23 referendum was announced four months ago. Last week, the loonie gained 1.4 percent as expectations fell for interest rate hikes from the U.S. Federal Reserve and as oil made fresh 2016 highs above $50 a barrel.
Equities Recap
European shares fell to more than three months low on Monday, hit by a sell-off in cyclical stocks and worries over a possible British exit from the European Union.
UK's benchmark FTSE 100 closed down 0.9 percent, the pan-European FTSEurofirst 300 ended the day down by 1.62 percent, Germany's Dax ended down 1.5 percent, France’s CAC finished the day down by 1.5 percent.
Wall Street stumbled for a third straight session on Monday as tech stalwarts Microsoft and Apple dragged on indexes and investors braced for major economic and political events in the United States and Europe.
Dow Jones closed down by 0.74 percent, S&P 500 ended down by 0.81 percent, Nasdaq finished the day up by 0.92 percent.
Treasuries Recap
U.S. Treasury yields fell to a four-month low on Monday led by shorter-dated maturities as increased fears about Britain exiting the European Union weighed on investor risk appetite and sovereign debt yields in developed markets around the globe fell to all-time lows.
Benchmark 10-year notes rose 7/32 in price to yield 1.616 percent, after earlier falling to 1.608 percent, the lowest since Feb. 11.
Commodities Recap
Oil prices slipped lower on Monday, weighted down by a strong U.S. dollar and concerns economic growth prospects in Europe and Asia, but supported by ongoing supply outages in Nigeria.
Brent crude oil futures settled down 19 cents, or 0.4 percent, at $50.35 per barrel, while U.S. crude ended 19 cents, or 0.4 percent, lower at $48.88 a barrel.
Gold rose to hit its highest since mid-May on Monday, supported by rising investor risk aversion before this week's Federal Open Market Committee policy meeting and Britain's June 23 vote on whether to leave the European Union.
Spot gold was up 0.6 percent at $1,281.96 an ounce at 2:58 p.m. EDT (1858 GMT), off an earlier peak of $1,287. U.S. gold futures for August delivery settled up 0.9 percent at $1,286.90 an ounce.
