Market Roundup
- Three of six UK opinion polls show shift towards “remain” – Reuters FACTBOX.
- EU banking watchdog to leave London in case of Brexit – Reuters.
- CFTC IMM CTA data - Specs reduce net-long USD positions, net GBP shorts cut.
- Japan May trade deficit Y40.7 bln, Y40 bln surplus eyed, exports -11.3% y/y, fall at fastest pace since Jan, imports -13.8% y/y, -10.4% and -13.8% eyed, exports to US -10.7%, China -14.9%, Asia -13.0%.
- Japan May crude import volume +11.3% y/y, thermal coal +44%, LNG -4.0%.
- BoJ holds more than a third of all JGBs – Nikkei.
- China May new home prices +6.9%y/y, Apr +6.2%, Beijing +19.5/Shanghai +27.7%.
- PBOC established direct FX trading between CNY, ZAR – Reuters.
- Germany FinMin - German economy had good Q2 start, upswing to continue.
- New Zealand Q2 Westpac/MM consumer confidence index 106.0, Q1 109.6.
- RBI Gov Rajan not seeking second term, to return to academia Sept 4 -Reuters.
Economic Data Ahead
- No significant economic data releases
Key Events Ahead
- (0350 ET/0750 GMT) BoJ Gov Kuroda speaks at Keio University in Tokyo.
- (0540 ET/0940 GMT) Netherlands E1-2 bln 3 and 6-month DTC auctions.
- (0600 ET/1000 GMT) Belgium E2.2-3.2 bln 1.0/1.0/1.9% 2026/31/38 OLO auctions.
- (0850 ET/1250 GMT) France 3/6/12-month BTF treasury note auctions.
- (1230 ET/1630 GMT) Minny Fed Kashkari at Minny Fed/Peterson symposium in Washington, DC.
FX Beat
USD: The dollar index, against a basket of currencies trades lower at 93.67, having touched an 11-day low of 93.45 as the greenback declined against most of its major peers, apart from the yen.
EUR/USD: The euro rallied as investors applauded weekend’s Brexit opinion polls, which showed votes shifting in favor of ‘Remain’ camp. The major extended gains to trade 0.9 percent up at 1.1380 after opening higher at 1.1331. The pair continues to rise, hovering towards a peak of 1.1415, amid renewed optimism surrounding the EU referendum. In the week ahead, markets attention will remain on the EU referendum. Immediate resistance is located at 1.1400 level, break above targets 1.1415. On the lower side, support is seen at 1.1308 (Session Low), break below could drag the pair till 1.1300 level.
USD/JPY: The major opened up with a bullish gap, however, it struggles to extend above 104.80 resistance level. The greenback boosted after latest Brexit polls conducted during the weekend showed increasing possibility of Britain voting to remain in the European Union. The pair trades 0.6 percent higher at 104.74 yen, having touched an early high of 104.84. Data released earlier today showed Japan's May trade balance came in at a deficit of 40.7bn yen against 40.7bn yen consensus and previous 823.2bn yen. Markets attention now remains on Janet Yellen testimony before the Congress, ahead of EU referendum to be held on June 23rd. Immediate resistance is located at 105.01 (5-DMA), break above targets 106 level. On the down side, support is seen at 104.04 (Previous Session Low).
GBP/USD: Sterling rose more than 1 pct against dollar as momentum shifted in favor for Britain to remain in the European Union just days ahead of a referendum. Three opinion polls before Thursday's vote showed the 'Remain' camp gaining some traction, however, the overall picture remained evenly split. Sterling advanced 1.6 percent to 1.4581, its highest level since June 8, extending a recovery from last week's 2-month trough of 1.4012. Immediate resistance is located at 1.4621 (Session High), break above targets 1.4662. On the downside, support is seen at 1.4401 (Jun-2 Low). Against the euro, the pound was trading 0.6 percent higher at 77.95 pence.
AUD/USD: The Australian dollar was strengthened by improved risk appetite as momentum shifted towards Britain remaining in the European Union ahead of this week's referendum. The Aussie rose 0.7 percent to 0.7449, pulling further away from a low of 0.7285 touched last week. The major was also supported by commodity price rally and risk-on sentiment across financial markets. Markets will closely watch tomorrow’s RBA official Debelle’s speech and RBA May meeting minutes for fresh cues. Immediate resistance is located at 0.7482 (Jun-8 High), break above will take the pair till 0.7500 level. On the lower side, support is seen at 0.7046 (Session Low).
NZD/USD: The New Zealand dollar gained more than 1 percent on the back of broad-dollar weakness. The kiwi trades 1 percent higher at 0.7114, having touched a high of 0.7123. According to Westpac analyst, the major is likely to decline later this year, targeting 0.65, based on the assumptions that the RBNZ will cut the interest rate to 2.0 percent and the Fed will tighten once. Immediate resistance is located at 0.7147 (Jun-9 High), while on the down side, support is seen at 0.7046 (5-DMA).
Equities Recap
Asian shares gained as fears that Britain would vote to leave the European Union eased, strengthening a recovery in both sterling and investors' risk appetite.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 1 percent.
Tokyo's Nikkei gained 2.34 pct at 15,965.30, Australia's S&P/ASX 200 index rose 1.66 pct at 5,248.50 points and Seoul shares added 1.49 pct.
Shanghai Composite was flat at 2,882.64 points, while CSI300 index was at 3,118.29 points.
Hong Kong’s Hang Seng was trading 1.8 percent higher at 20,536 points. Taiwan shares edged up 0.7 pct at 8,625.92 points.
Commodities Recap
Oil gained, following a rally in the previous session as a weaker dollar and easing worries over Britain's possible exit from the European Union supported crude. London Brent crude for August delivery was up at $49.72 a barrel by 0645 GMT, after settling up $1.98, or 4.2 percent, at $49.17 on Friday. NYMEX crude for July delivery, which expires on Tuesday, was up 44 cents at $48.42 a barrel, after closing up $1.77, or 3.8 percent, on Friday.
Gold declined more than 1 percent as opinion polls indicated an increasing possibility of Britain voting to remain in the European Union in a referendum later this week. Spot gold had dropped 1.05 percent to $1,284.07 an ounce by 0646 GMT, having touched a low of $1,279.95 an ounce earlier in the session. U.S. gold slid 0.5 percent to $1,287.90.
Treasuries Recap
The U.S. Treasury 10-year note yield rose to as high as 1.6610 percent, pulling back from a 4-year low of 1.5180 plumbed on Thursday.
The 10-year Japanese government bond yield hovered significantly above a record low touched last week.
New Zealand yields rose 2 basis points at the short end and 3.5 basis points at the long end.
Australia's 3-year government bond futures slipped 3 ticks to 98.460, recoiling from an all-time high of 98.570 set on Friday. The 10-year contract fell 5.5 ticks to 97.8600, also retreating from a record high of 98.0100.
Canadian government bond prices were lower across the maturity curve, with the 2-year price down 1.5 Canadian cent to yield 0.520 percent and the benchmark 10-year falling 13 Canadian cents to yield 1.121 percent.
