Market Roundup
- Preparing for Brexit, Britain may see new PM by early September – Reuters.
- UK’s Osborne rules himself out of race to succeed PM Cameron – Times.
- Japan PM Abe – eyeing FX-stock markets closely, uncertainty remains, Brexit effect on economy longer-term - Reuters.
- FinMin Aso – Market has regained calm, more stable than worst-case scenario, ready to respond if/when necessary – Reuters.
- BoJ Gov Kuroda – Ready to assist proper market functioning, policy stance unchanged; BoJ offers $1.47 bln at regular USD ops – Reuters, Nikkei.
- EconMin Ishihara – Ensuring liquidity for SMEs important part of stimulus.
- ChiefCabSec Suga – No decision yet on size of economic stimulus – Reuters.
- Market sees two rounds of BoJ easing within a year – Nikkei.
- Nikkei poll – Japanese firms see weaker European economy post-Brexit.
- Japan FY ‘15/16 tax revenue Y56.3 trln, lower than eyed, JPY rise cited.
- PBOC fixes yuan at 6.6528 vs USD, lowest since Dec ’10 for 2nd straight day, yuan basically stable vs basket.
- Australian consumers keep their nerve in face of Brexit turmoil - Reuters.
Economic Data Ahead
- (0300 ET/0700 GMT) Spain May retail sales, +3.6% y/y eyed; last +4.1%.
- (0300 ET/0700 GMT) Sweden May trade balance; last SEK4.4 bln surplus.
- (0300 ET/0700 GMT) Sweden May retail sales, +0.8% m/m eyed; last unch m/m, +1.7% y/y.
- (0330 ET/0730 GMT) Sweden May PPI; last -0.9% m/m -4.2% y/y.
- (0400 ET/0800 GMT) Italy Jun consumer confidence index, 112.5 eyed; last 112.7.
- (0400 ET/0800 GMT) Italy Jun business confidence index, 101.9 eyed; last 102.1.
- (0830 ET/1230 GMT) United States Q1 GDP – final, +1.0% q/q eyed; prelim +0.8%.
- (0830 ET/1230 GMT) United States Q1 GDP deflator – final, +0.6% y/y eyed; prelim +0.6%.
- (0830 ET/1230 GMT) United States Q1 PCE/core PCE – final, +0.3%, +2.1% eyed; prelim +0.3%, +2.1%.
- (0830 ET/1230 GMT) United States Q1 corporate profits, +0.6% q/q eyed; prelim +0.6%.
- (0900 ET/1300 GMT) United States Apr CaseShiller HPI-20, +0.6% m/m, +5.4% y/y eyed; last +0.9%, +5.4%.
- (1000 ET/1400 GMT) United States Jun consumer confidence index, 93.3 eyed; last 92.6.
- (1000 ET/1400 GMT) United States Jun Richmond Fed mfg ship, services, comp indices; last -8, 11, -1.
- (1030 ET/1430 GMT) United States Jun Dallas Fed services outlook, revenues indices; last -7.1, 5.8.
Key Events Ahead
- N/A ECB Central Bank Forum in Sintra, Portugal (till June 29).
- N/A European Council meeting in Brussels (till June 29).
- N/A BoE FPC meets, UK BizSec Javid hosts London roundtable on Brexit.
- (0400 ET/0800 GMT) EuroGroup Pres Dijsselbloem speaks at ECFR meeting at the Hague.
- (0500 ET/0900 GMT) Italy E6 bln 6-month BOT auction.
- (0530 ET/0930 GMT) ECB 7-day zero% refi, E55 bln allotment eyed, E49.88 bln maturing.
- (0700 ET/1100 GMT) EC Moscovici speaks in Brussels.
- (0715 ET/1115 GMT) Irish FinMin Noonan speaks at Dublin conference.
- (1300 ET/1700 GMT) SNB ViceChair Zurbruegg speaks in Hamburg.
- (1900 ET/2300 GMT) Fed Gov Powell speaks in Chicago.
FX Beat
USD: The dollar index, against a basket of currencies declined to 96.06, hovering away from a high of 96.71, struck in the previous session.
EUR/USD: The euro rose 0.3 percent to 1.1058, pulling away from a 3-month low of 1.0911 struck on Friday, hampered by British vote outcome. The major recovered as moderate risk on sentiment reduced demand for the safe haven treasuries. However, Brexit-led uncertainty continues to weigh on the investors’ minds. Markets await EU Summit and ECB President Mario Draghi speech on "The future of the international monetary and financial architecture" later in the day. Immediate resistance is located at 1.1083 (Previous Session High), break above targets 1.1100 level. On the lower side, support is seen at 1.1000 level, break below could drag the pair till 1.0970/ 1.0950.
USD/JPY: The greenback steadied as risk aversion triggered Brexit eased slightly and following warning of Bank of Japan intervention. The major moves between a tight range of 101.56 - 102.20 as many investors still wary on Britain's economic outlook. The major was trading at 102.01 yen, attempting to sustain gains above 102 level. The pair will be mainly driven by broader market sentiments, ahead of US Q1 GDP and consumer confidence data. Immediate resistance is located at 102.47 (Previous Session High), break above targets 103 level. On the downside, support is seen at 101.40, break below will drag the pair lower 101 level.
GBP/USD: Sterling edged up as risk aversion spurred by Brexit eased slightly. Ratings agencies Standard & Poor's and Fitch downgraded Britain's sovereign credit standing, after decision to leave the European Union would hamper the economy. S&P lowered United Kingdom sovereign credit rating to AA from AAA as negative outlook reflects risk to economic prospects, fiscal and external performance. Sterling was trading 0.7 percent higher at 1.3315, pulling away from a 31-year low 1.3119 touched on Monday. Immediate resistance is located at 1.3400 level. While on the downside, support is seen at 1.3198 (Session Low), break below will drag the pair near 1.3119. Against the euro, the pound was trading at 83.06 pence.
AUD/USD: The Australian dollar gained as risk sentiment improved slightly amid rising oil prices. The Aussie reversed most of previous session losses, trading 1 percent higher at 0.7395, attempting to rise above 0.7400 level. The major strengthened after oil prices bounced higher as an impending strike in Norway offered some respite to the oil markets. With the Brexit decision impact fading away, markets attention now remains on the US final GDP and consumer confidence data, due later in the day. Immediate resistance is located at 0.7437 (10-DMA), break above will take the pair till 0.7460. On the lower side, support is seen at 0.7323 (Previous Session Low, break below targets 0.7303.
NZD/USD: The New Zealand dollar rose above the 0.7000 level as the U.S. dollar weakened across the broad and on rallying oil prices. The Kiwi trades 1 percent higher at 0.7065, as a rebound in oil prices improved risk sentiment slightly against the backdrop of the Brexit vote. Immediate resistance is located at 0.7093 (10-DMA), break above will take the pair over 0.7100. On the lower side, support is seen at 0.6985 (Session Low), break below targets 0.6969 0.6950.
Equities Recap
Asian shares regained some momentum as improving risk sentiment underpinned by the oil-price rebound eased Brexit shock.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.4 percent.
Tokyo's Nikkei edged up 0.09 pct at 15,323.14, Australia's S&P/ASX 200 index declined 0.50 pct at 5,111.60 points and South Korea's Kospi 200 added 0.52 pct.
Shanghai composite index gained 0.2 pct at 2,902.44 points, while CSI300 index edged up 0.08 pct at 3,122.57 points.
Hong Kong’s Hang Seng was trading 0.7 percent lower at 20,075.89 points. Taiwan stocks rose 0.6 pct at 8,505.51 points.
Commodities Recap
Oil prices rose as a looming strike in Norway threatened to reduce output in Western Europe's biggest producer, although Britain's vote to leave the European Union was still weighing on markets. Brent crude oil was trading at $47.81 per barrel at 0428 GMT, up 0.6 percent. U.S. West Texas Intermediate futures were up 35 cents at $49.68 a barrel.
Gold edged down on profit taking, however, within the sight of its highest in over two years, buoyed by safe-haven demand as global financial markets slumped after Britain voted to exit the European Union. Spot gold was 0.5 percent down at $1,315.92 an ounce by 0424 GMT, after having gained 0.7 percent on Monday.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.4596 percent, while 5-year was 0.013 bps up at 1.0126.
The Japanese government bonds gained, with the yield on the benchmark 10-year bonds down 1-1/2 basis points to -0.205 percent, yield on 15-year bonds dipped 2-1/2 basis points to -0.073 percent, super-long 40-year bonds tumbled more than 3 basis points to 0.090 percent and the yield on 30-year JGB slid 3 basis points to 0.076 percent and 20-year bond yield ticked down 3-1/2 basis points to 0.055 percent.
The Australian government bonds rallied, with the yield on the benchmark 10-year Treasury note down more than 6 basis points to 1.995 percent and the yield on short-term 2-year note dipped more than 1 basis point to 1.575 percent.
New Zealand government bonds were a tad firmer, the 3-year bond contract edged up 3 ticks to 98.540.
Canadian government bond prices were higher across the maturity curve, the 2-year price rose 9.5 Canadian cents to yield 0.491 percent and the benchmark 10-year climbed 78 Canadian cents to yield 1.081 percent. The Canada-U.S. 10-year spread shifted 4.1 basis points to -37.5 basis points, its smallest gap since May 3, as Treasuries outperformed.
