Market roundup
• S&P lowers United Kingdom sovereign credit rating to AA from AAA.
• Merkel rejects informal Brexit talks before official UK application to leave.
• Italy’s Renzi will ask Germany’s Merkel to allow more leeway on public spending & EU state.
• UK’s Hammond: sees genuine fear among some EU partners about contagion resulting from Brexit.
• US June Markit comp flash PMI 51.2 v 50.9 forecast, Jun svcs OMI flash ‘unchanged.
• EU Sherpa’s agree no Brexit negotiations until Art. 50 invoked- French source.
• PM Cameron hopes London & financial sector have strong voice in Brexit talks.
• Germanys Schaeuble: have to resist temptation post-Brexit vote to react w/more socialization of risks.
• Italy to ask Germany for more leeway on budget, state-aid rules.
• Copper rises on stimulus hope, strong dollar hits other metals.
• UK's Cameron warns parliament not to try to block Brexit.
• Scottish National Party's spokesman warned Cameron that SNP had no intention of seeing Scotland taken out of the EU against its will.
Looking Ahead - Economic Data (GMT)
• No Significant Data
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0930 levels and currently trading at 1.1007 levels. The pair has made session high at 1.1051 and hit lows at 1.0970 levels. Euro slipped lower against dollar on Monday, as Britain's shock vote to leave the European Union roiled the market, hammering euro, lifting bond and gold prices, and dragging the British pound to a 31-year low. Investors dumped U.S. and European stocks on worries about the global economic fallout after last Thursday's referendum on the world's sixth-largest economy to withdraw from the European economic bloc. Meanwhile, the leaders of France, Germany and Italy met in Berlin on Monday to plan their next moves and said Europe needed to respond to its people's concerns by setting clear goals to improve security, the economy and prospects for its people. The euro, fell 1.2 percent to as low as $1.098. The dollar index, which tracks the greenback's value against six currencies, was up 1.1 percent.
GBP/USD is supported in the range of 1.3100 currently trading at 1.3188 levels. It reached session high at 1.3250 and hit low at 1.3117 levels. Sterling declined sharply against the dollar on Monday as a sell-off stemming from Britain's decision to quit the European Union gathered pace, as Brexit clouded the future of the rest of the bloc. Finance minister George Osborne said on Monday the British economy was strong enough to cope with the volatility caused by Thursday's referendum, the biggest blow since World War Two to the European goal of forging greater unity. But his words failed to stop sterling sinking to its lowest level against the U.S. currency for 31 years, continuing the slide that began last week when Britons confounded investors' expectations by voting to end 43 years of EU membership. Sterling fell as low as $1.3122, a decline of almost 4 percent to its lowest since September 1985, and bond yields chalked up their biggest two-day fall since the BoE started its quantitative easing bond buying binge in March 2009.
USD/CAD is supported at 1.2968 levels and is trading at 1.3077 levels. It has made session high at 1.3122 and lows at 1.3006 levels. The Canadian dollar declined against its U.S. counterpart on Monday as Britain's vote to leave the European Union sent new shockwaves through financial markets, weighing on Canada's risk-sensitive currency. Global stocks and oil prices fell as market participants absorbed the shock of Brexit. Losses for the loonie came after it fell 1.7 percent on Friday, its largest drop in 17 months. The rallying dollar helped drag oil prices down. U.S. crude oil futures settled at $46.33 per barrel, down $1.31 or 2.75 percent. Canada’s commodity-linked economy will suffer weaker growth because of Britain's vote to leave the EU, which has put the prospect of Canadian interest rate cuts back on the table. Meanwhile, U.S. stocks were sharply lower, following European markets, pulled down by banking stocks amid uncertainty over London's future as the region's financial capital.
USD/JPY is supported around 101.00 levels and currently trading at 102.09 levels. It peaked to hit session high at 102.12 and made session lows at 101.46 levels. The yen declined against US dollar on Monday as investors dumped safe-haven currencies such as the Japanese yen in favour of US dollar. Traders expect safe-havens currencies like Japanese yen to remain on the back foot as the impact of the Brexit overshadowed local events in coming weeks. Meanwhile, Japanese Prime Minister Shinzo Abe on Monday instructed Finance Minister Taro Aso to watch currency markets "ever more closely" and take steps if necessary, in the wake of Britain's historic vote to leave the European Union. Abe made the comments at an emergency meeting with Aso and Bank of Japan Deputy Governor Hiroshi Nakaso as some analysts speculate the central bank may ease if it calls an unscheduled policy review before its planned July 28-29 gathering.
Equities Recap
European shares fell on Monday, with banks making their biggest two-day loss on record as uncertainty over Britain's decision to leave the European Union continued to rock global markets.
UK's benchmark FTSE 100 closed down by 2.6 percent, the pan-European FTSEurofirst 300 ended the day down by 3.69 percent, Germany's Dax ended down by 3.1 percent, France’s CAC finished the day down by 3. 1 percent.
Wall Street slid sharply again on Monday after Britain's shock vote to leave the European Union, putting major U.S. stock indexes on track for their worst two-day swoon in about 10 months.
Dow Jones closed down by 1.49 percent, S&P 500 ended down by 1.80 percent, Nasdaq finished the day down by 2.41 percent.
Treasuries Recap
The U.S. Treasury debt market rallied on Monday with benchmark yields hovering near four-year lows in a global scramble for safe-haven investments following Britain's stunning vote to leave the European Union.
Benchmark 10-year notes gained 1-4/32 in price to yield 1.455 percent, down 12 basis points from Friday. The 10-year yield booked its steepest two-day drop since November 2011.
The 30-year bond jumped 3-9/32 in price, yielding 2.276 percent, after touching its lowest levels in nearly 17 months.
Commodities Recap
Crude prices tumbled nearly 3 percent on Monday, with Brent hitting seven-week lows, as a rallying dollar and market uncertainty over Britain's shocking vote to exit the European Union threatened to sap more strength from oil's rebound this year.
Brent settled down $1.25, or 2.6 percent, at $47.16 a barrel. It fell to a seven-week low of $46.69 during the session.
U.S. crude fell to $1.31, or 2.8 percent, to settle at $46.33. The intraday low of $45.83 matched a one-month trough hit on June 17.
Gold rose on Monday, staying close to the more than two-year high hit on Friday, as uncertainty over Britain's vote to leave the European Union pushed investors to sell equities and seek safer assets.
Spot gold rose as much as 1.5 percent to a session high of $1,335.30 an ounce and was up 0.8 pct at $1,326.26 by 3:16 p.m. EDT (1916 GMT). It rallied 8 percent to $1,358.20 at one stage on Friday, the highest price since March 2014.
U.S. gold futures settled up $2.30, or 0.2 percent, at $1,324.70 per ounce
