Market Roundup
• UK's "In" camp sees lead shrink ahead of EU vote - Survation poll.
• US Redbook up slightly -0.9% m/m vs -1% previous.
• Fed’s Yellen: expects turnaround in labor market slowdown in coming months.
• Fed’s Yellen: can’t give precise time when balance sheet reduction will begin.
• Fed’s Yellen: not likely Brexit will push US into recession, considering impacts on US monetary policy.
• Fed's Powell warns that dollar-based Libor could disappear.
• ECB’s Draghi: ECB's corporate bond buys not encountering obstacles, investment levels unsatisfactory EU level action needed.
• ECB’s Draghi: inflation dynamics in the Euro area remain subdued.
• ECB’s Draghi: Helicopter money was never discussed – DJ.
Looking Ahead - Economic Data (GMT)
• No Significant Data
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currencies Summary
EUR/USD is likely to find support at 1.1184 levels and currently trading at 1.1259 levels. The pair has made session high at 1.1320 and hit lows at 1.1242 levels. The euro declined against dollar on Tuesday, as the dollar rebounded back against euro, after a new poll on Britain's referendum on European Union membership showed growing support for the "Leave" camp, pushing down the euro lower. The dollar rose to a session high against a basket of six currencies after polling firm Survation showed the percentage of voters supporting Britain's exit from the EU had risen to 44 percent from 42 percent in its previous poll on Sunday. Meanwhile, Federal Reserve Chair Janet Yellen offered no surprises in her testimony before lawmakers, stating that global risks and a U.S. hiring slowdown warrant a cautious approach to raising interest rates as the U.S. central bank looks for confirmation that the country's economic recovery remains on track. The dollar index rose 0.25 percent to 94.09 after earlier being flat. The euro fell 0.4 percent against dollar to a session low of $1.1257.
GBP/USD is supported in the range of 1.4542 and currently trading at 1.4627 levels. It reached session high at 1.4752 and hit low at 1.4652 levels. The British pound declined against dollar on Tuesday, as investors were worried after a poll showed the campaign for Britain to stay in the European Union has lost some of its lead ahead of Thursday's referendum on EU membership. The telephone poll, which was conducted by Survation for spread-betting firm IG on Monday, put support for "In" at 45 percent, ahead of "Out" on 44 percent. Having earlier surged to $1.4788, its highest since the first trading day of the year, sterling slipped to $1.4656, leaving it down 0.1 percent on the day. That still left it almost 5 percent up since Thursday. Brexit worries have dominated sterling since late last year. Britain's hefty current account deficit - 7 percent of output in the last quarter of 2015 makes the economy particularly vulnerable to any pull-back in investment flows, which economists reckon would happen if Britain votes to leave the EU.
AUD/USD is supported around 0.7440 levels and currently trading at 0.7462 levels. It hit session high at 0.7511 and made session lows at 0.7453 levels. The Australian dollar retreated against its U.S. counterpart on Tuesday, after Reserve Bank of Australia gave no clear hint that it would ease policy again and this combined with anxiety that Britain will leave the European Union saw the Aussie retreat towards $0.7460 levels. Minutes of the Reserve Bank of Australia's (RBA) June 7 meeting showed the central bank considered the current policy setting as appropriate for promoting sustainable economic growth and returning inflation to target over time. The central bank left the cash rate steady at a record low 1.75 percent in a widely expected move, having delivered an unexpected cut in May on disturbingly low inflation. U.S. stocks edged higher, though polls and surveys showing Britain's referendum on a knife-edge kept investors nervous.
USD/CAD is supported at 1.2730 levels and is trading at 1.2809, it has made session high at 1.2827 and lows at 1.2783 levels. The Canadian dollar weakened slightly against its U.S. counterpart on Tuesday as oil prices fell and investors remained cautious ahead of this week's Britain's vote on its EU membership. Providing a headwind for Canada's commodity-linked currency, oil prices fell nearly 65 cents, briefly dropping back below $50 per barrel and ending a two-day rally as the latest opinion polls indicated Thursday's referendum could go either way. The dollar strengthened against a basket of major currencies, mainly due to a 0.8 percent surge against the yen, which has retreated this week on indications the campaign for Britain to stay in the EU has regained some momentum. Concern that Britain, the world's fifth-largest economy, will leave the EU has weighed on financial markets for weeks and has been cited by central bankers, including Yellen, as a major obstacle for the global economy.
Equities Recap
European shares rose on Tuesday as worries that British would choose to leave the European Union eased, although caution prevailed over what is expected to be a close vote.
Britain's blue-chip FTSE 100 index closed up by 0.7 percent, the pan-European FTSEurofirst 300 ended the day up by 0.93 percent, Germany's Dax closed up 0.8, and France’s CAC finished the day up by 0.9 percent.
U.S. stocks rose on Tuesday led by gains in technology shares as Federal Reserve Chair Janet Yellen was optimistic about the economy and played down the risk of a recession, while concern over the upcoming British referendum remained subdued.
Dow Jones closed up 0.13 percent, S&P 500 ended the day up by 0.27 percent, Nasdaq finished the day up by 0.14 percent.
Treasuries Recap
U.S. Treasury yields rose to one-and-a-half week highs on Tuesday after the Treasury saw soft demand for a sale of five-year notes and as investors evaluated whether Britain will vote to remain in the European Union on Thursday.
Benchmark 10-year notes were last down 9/32 in price to yield 1.699 percent, up from 1.670 percent late on Monday.
Commodities Recap
Gold fell to a 10-day low on Tuesday as global shares rose and expectations that Britain could vote to leave the European Union in Thursday's referendum receded.
Spot gold fell as much as 1.9 percent to a low of $1,265.40 an ounce and was down 1.6 percent at $1,269.80 by 2:42 p.m. EDT (1842 GMT). U.S. gold settled down 1.5 percent at $1,272.50.
Oil prices dipped on Tuesday on more speculation over Britain's future in the European Union, then pared losses to settle off session lows as a U.S. refinery outage triggered a rebound in gasoline prices.
Brent crude futures' front-month, August, settled down 3 cents at $50.62 a barrel, after falling more than $1 to a session low of $49.46. The contract had gained 7 percent in the last two sessions.
U.S. crude futures' expiring July front-month contract closed down 52 cents, or 1 percent, at $48.85 a barrel, versus a session low at $48.16. The more actively-traded August contract, the new front month from Wednesday, settled down 11 cents at $49.85.
