Market Roundup
• TNS poll shows 41% of Britons for ‘Remain’, 43% for ‘Leave’, Opinion has ‘in’ 44%, ‘out ‘ 45%.
• Sterling ticks down after TNS poll gives Brexit camp 2-point lead.
• U.S. existing home sales rise to more than 9-yr high, 5.53mn vs 5.43mn-previous.
• USD weakens, impending Brexit vote lifts GBP & EUR, DXY lower after Yellen sounds downbeat on jobs.
• Fed’s Yellen: productivity has been slow, expects further improvement in job market & wage growth.
• IMF’s Lagarde: 10-20% overvaluation of USD vs range of currencies likely due to flight to safety, fall in oil prices.
• IMF’s Lagarde: Fed should focus on stability, avoid "abrupt" moves, doesn’t see competitive devaluation in currency markets.
• ECB reinstates waiver provides Greek banks' access to cheap funding.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Foreign Bond Investment w/e 867.8b-previous
• 23:50 Japan Foreign Invest JP Stock w/e 128.3b- previous
• 02:00 Japan Nikkei Mfg PMI Flash Jun 47.7- previous
Looking Ahead - Events, Other Releases (GMT)
• 01:30 Japan- BoJ board member Kiuchi speaks to business leaders in Ishikawa
Currencies Summary
EUR/USD is likely to find support at 1.1235 levels and currently trading at 1.1296 levels. The pair has made session high at 1.1337 and hit lows at 1.1268 levels. The dollar declined against the euro on Wednesday as risk appetite returned to markets, boosting higher-risk currencies, while the euro rose on the last day of campaigning before Britain's referendum on European Union membership. U.S. Federal Reserve’s Yellen offered no new surprises on monetary policy on her second day of testimony in Washington on Wednesday. She struck a relatively dovish tone on Tuesday, 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 fell by about 0.2 percent to 104.59 yen and was 0.35 percent lower against the basket of currencies that measures its broader strength . It fell 0.6 percent against the euro to $1.1296.
GBP/USD is supported in the range of 1.4542 and currently trading at 1.4697 levels. It reached session high at 1.4772 and hit low at 1.4638 levels. The Sterling declined against the dollar on Wednesday, after an opinion poll gave the campaign for Britain to leave the European Union a two-point lead over the rival "In" camp, just a few hours before voting begins in a referendum on EU membership. TNS, a market research firm, said 43 percent of respondents would vote to leave, while 41 percent would vote to remain and 16 percent were undecided or did not intend to vote. The poll was conducted online and interviewed 2,320 adults between June 16 and 22. The lead for the Brexit camp was down from a poll published on June 14, which found 47 percent of likely voters would opt to leave the EU, ahead of 40 percent who wanted to stay. Sterling slipped to $1.4630 after the poll, down from $1.4704 immediately before its release. It also weakened to 77.09 pence per euro, having traded at 76.88 pence before the publication of the survey.
AUD/USD is supported around 0.7440 levels and currently trading at 0.7503 levels. It hit session high at 0.7525 and made session lows at 0.7483 levels. The Australian dollar inched slightly higher against its U.S. counterpart on Wednesday with investors retreating to the sidelines a day before Britain votes on whether to stay in or leave the European Union. Britain's referendum vote on European Union membership still looks too close to call, a win for the 'leave' side will likely to cause turmoil in global markets. On the other side, a 'remain' vote would remove a major cloud over the global economy and trigger a relief rally in risky assets. The Australian dollar traded slightly higher on the day at $0.7500, having stepped back from $0.7525 a high not seen in nearly two months. Investors are also keeping an eye on the path of U.S. interest rates. Meanwhile, Federal Reserve chair Janet Yellen said on Tuesday that the Fed's ability to raise interest rates this year may hinge on a rebound in hiring. Meanwhile, International Monetary Fund Managing Director Christine Lagarde said on Wednesday that the Fed should avoid "abrupt" interest rate moves and focus on stability.
Trading volume remains thin as investors adopt a wait-and-watch approach.
USD/CAD is supported at 1.2730 levels and is trading at 1.2828, it has made session high at 1.2853 and lows at 1.2752 levels. The Canadian dollar declined against its U.S. counterpart on Wednesday as oil prices declined and investors were cautious that Britons would vote to leave the European Union, while domestic data showed a rebound in retail sales. Oil prices fell sharply, falling nearly 3 percent, after a smaller-than-expected U.S. inventory drawdown and jitters ahead of a vote on whether Britain should stay in the European Union. Canadian retail sales rose 0.9 percent in April from March, mainly on higher gasoline prices, Statistics Canada said. This follows a 0.8 percent decline in March, a smaller dip than previously reported. Excluding autos, sales rose 1.3 percent, stronger than analysts expected. U.S. Federal Reserve Chair Janet Yellen on Tuesday virtually ruled out a July interest rate hike and played down the risk of a recession, but warned that the British referendum and a U.S. hiring slowdown posed risks to the economic outlook.
Equities Recap
European shares rose on Wednesday, but ended off highs as results of a poll rekindled concerns that Britain may leave the European Union hours before voting in the country's membership referendum starts.
Britain's blue-chip FTSE 100 index closed up by 1.2 percent, the pan-European FTSEurofirst 300 ended the day up by 1 percent, Germany's Dax closed up by 1.2 percent, and France’s CAC finished the day up by 1 percent.
U.S. stocks dipped in low trading volume on Wednesday, with traders focusing on Thursday's referendum on whether Britain will remain part of the European Union.
Dow Jones closed down 0.27 percent, S&P 500 ended the day down by 0.16 percent, Nasdaq finished the day down by 0.21 percent.
Treasuries Recap
U.S. Treasury prices gained on safety buying on Wednesday after two opinion polls showed that the campaign for Britain to leave the European Union held a lead, a day before Thursday’s membership referendum.
Benchmark 10-year notes were last up 3/32 in price to yield 1.69 percent, down from 1.70 percent late Tuesday. Yields had fallen to an almost four-year low of 1.52 percent last Thursday as fears over a British exit from the EU accelerated, before retracing this week as some of these concerns ebbed.
Commodities Recap
Oil prices settled down more than 1 percent on Wednesday after a smaller-than-expected U.S. inventory drawdown and amid jitters ahead of a vote on whether Britain should stay in the European Union.
Brent eventually settled down 74 cents, or 1.5 percent, at $49.88 a barrel.WTI fell 72 cents, or 1.4 percent, to settle at $49.13.
Gold fell to a two-week low on Wednesday after its biggest one-day drop in four weeks, as expectations that Britain will vote to remain in the European Union reduced risk aversion and lent a firmer tone to stocks.
Spot gold hit a two-week low of $1,261.01 an ounce and was down 0.1 percent at $1,266.60 an ounce by 2:35 p.m. EDT (1835 GMT), little changed from late on Tuesday. U.S. gold futures for August delivery settled down 0.2 percent at $1,270 an ounce.
