Market Roundup
- BBC, Sky, ITV - UK votes to “leave”.
- Japan FinMin Aso – No comment on any joint G7 intervention, will respond in FX market as needed, concerned over effects of Brexit vote – Reuters.
- Japan govt – Volatile FX moves undesirable, stability extremely important, concern over impact of UK vote, closely monitoring situation – Reuters.
- BoJ June Policy Board meeting minutes – Some signal more easing, fret over weak prices, risks seen up, concern over market volatility, Kiuchi dissent on NIRP, QQE.
- Japan ruling coalition headed for hefty win in Upper House poll – Media.
- Dallas Fed Kaplan drops call for near-term rate hike – Reuters.
- Foreign CB US debt holdings +$139 mln to $3.238 trln June 22 week, Treasury Holdings +$2.191 bln to $2.925 trln, agencies -$1.919 bln to $263.195 bln.
- Lipper – Investors flee US stock funds before Brexit vote, $6.1 bln outflow week-ended Wednesday, bond funds attract $2.5 bln, money market $1.2 bln.
- Fed – Big US banks have enough capital to withstand severe stress – Reuters.
Economic Data Ahead
- (0400 ET/0800 GMT) Germany Jun Ifo business climate index, 107.5 eyed; last 107.7.
- (0400 ET/0800 GMT) Germany Jun Jun Ifo current conditions index, 114.0 eyed; last 114.2.
- (0400 ET/0800 GMT) Germany Jun Jun Ifo expectations index, 101.2 eyed; last 101.6.
- (0400 ET/0800 GMT) Italy Apr retail sales; last -0.6% m/m sa, +2.2% y/y nsa.
- (0430 ET/0830 GMT) Great Britain May BBA mortgage approvals; last 40.1k.
- (0500 ET/0900 GMT) Italy May wage inflation; last unch m/m, +0.6% y/y.
- (0730 ET/1130 GMT) United States May building permits – revised; prelim 1.14 mln AR, +0.7% m/m.
- (0830 ET/1230 GMT) United States May durable goods orders, -0.5% m/m eyed; last +3.4%.
- (0830 ET/1230 GMT) United States May - ex-transport, unch m/m eyed; last +0.5%, ex-def +3.8%.
- (0830 ET/1230 GMT) United States May – non-defense capital goods ex-air, +0.3% m/m eyed; last -0.6%.
- (1000 ET/1400 GMT) United States Jun U.Mich sentiment index – final, 94.0 eyed; prelim 94.3.
Key Events Ahead
- N/A Sweden FinMin, Riksbank, Debt Office, FSA meeting on UK EU vote.
- (0300 ET/0700 GMT) ECB/BdF Villeroy speaks at Paris conference.
- (0500 ET/0900 GMT) ECB Angeloni in Rome panel discussion.
- (0600 ET/1000 GMT) UK DMO GBP0.5/1.5/1.5 bln 1/3/6-month treasury bill auctions.
FX Beat
USD: The dollar index, against a basket of currencies trades at 95.96, having touched an early high of 96.70 after Britain voted leave the European Union.
EUR/USD: The euro declined on renewing risk-aversion sentiment as Britain voted to leave the European Union,. The euro declined to 1.0911 from a high of 1.1427 and was last trading 0.3 percent lower at 1.1024. The major is vulnerable and is likely to decline further. Immediate support is located at 1.0821 (Mar-3 Low), while on the up side, resistance is located at 1.1427 (Session High).
USD/JPY: The Japanese yen rose, breaching the 100 level for the first time since Nov. 2013 as the results from the closely watched UK-EU referendum resulted in a Brexit. The yen is likely to gain as investors rushed towards perceived safe -haven amid Brexit turmoil. The major gained a bit after the Japanese central bank announcement to provide sufficient liquidity in order to reduce extreme volatility in the FX market. The greenback trades 4.2 percent lower at 101.65, having touched a low of 98.82, a level last touched in Nov 2013. Immediate support is seen at 98.00 level, while on the upside, resistance is located at 106.82.
GBP/USD: Sterling slumped to the lowest levels since Sept 1985, hitting a 31-year low in its biggest fall on record after Britons voted to leave the European Union. The major had hit a 2016 high above 1.50 level after an earlier opinion poll showed an outcome in favor of 'Remain', however, it declined almost 10 percent as Britain voted to leave European Union. Sterling trades lower at 1.3404, having touched an early low of 1.322. Immediate support is located at 1.3100, while resistance is located at 1.4000. Against the euro, the pound trades lower at 81.96 pence, having touched a low of 83.13 pence earlier in the session.
AUD/USD: The Australian dollar came under heavy pressure as investors watched results roll in from Britain. The Aussie was down 3.0 percent at 0.7375, having gone as low as 0.7304 earlier in the session. The major declined also due to a sharp drop in the GBP/AUD cross. Immediate support is located at 0.7300; break below could take the pair to 0.7285. On The higher side, resistance is seen at 0.7647 (Session High), break above targets 0.7700 level.
NZD/USD: The New Zealand dollar declined as investors dumped the riskier assets and turned towards safe-haven assets. The kiwi dropped to 0.6970. from a high of 0.7296, however, it regained some ground to trade above the 0.7000 level. It was last trading 0.3 percent lower at 0.7027. The major is likely to be driven by Brexit sentiments. Immediate support is located at 0.6970 (Session Low), break below could drag the pair lower 0.6950 level. On the higher side, resistance is located at 0.7300.
Equities Recap
Asian markets crashed after Britain had voted to leave the European Union, sending investors towards safe-haven assets.
Tokyo's Nikkei declined 7.92 pct at 14,952.02, Australia's S&P/ASX 200 index lost 3.30 pct at 5,106.60 points and Seoul shares dropped 3.21 pct.
Shanghai composite index trades 1.3 pct lower at 2,854.27 points and CSI300 index also trades 1.2 pct lower at 3,079.02 points.
Hong Kong’s Hang Seng was trading 4.3 percent lower at 19,948 points. Taiwan stocks edge down 2.3 pct at 8,476.99 points.
Commodities Recap
Oil prices slumped more than 4 percent after results from a British referendum on European Union membership showed Britain voting to leave the EU. Brent crude was down 4.4 percent at $48.65 a barrel, having dropped as low as $47.52 a barrel. U.S. crude was down $2.40 at $47.71 a barrel.
Gold rallied above $1,300 an ounce after results in a UK referendum showed Britain leaving the European Union, strengthening the appetite for safe-haven assets. Spot gold was up 5.0 percent at $1,317 an ounce by 0615 GMT, after rising as high as $1,358, the strongest since Mar 2014. U.S. gold for August delivery rose 3.4 percent to $1,305.70.
Treasuries Recap
The U.S. 10-year treasury prices rose nearly 3 points in safe haven rally after Britain voted to leave European Union
The Japanese 30-year bond yield fell to record low of 0.145 percent as voters have voted in favor of Brexit. The yield on the benchmark 10-year bonds fell 6 basis point to -1.195 percent, yield on super-long 40-year bonds dipped 7 basis points to 0.192 percent, yield on super-long 30-year bonds tumbled 7 basis points to 0.150 percent and the short-term 2-year JGB yield slid 4 basis point to -0.272 percent.
The Australian government bonds rallied as Britain has voted to leave the European Union in a referendum after 43 years of membership in the bloc. The yield on the benchmark 10-year Treasury note fell more than 21 basis points to 2.041 percent and the yield on short-term 2-year note jumped nearly 19 basis point to 1.558 percent.
New Zealand government bonds gained with yields down 14 basis points at the short end and down 19.5 at the long end.
Canadian government bond prices were lower across the maturity curve, the 2-year price fell 5.5 Canadian cents to yield 0.627 percent, and the benchmark 10-year dropped 65 Canadian cents to yield 1.301 percent. The 10-year yield touched its highest level since June 1 at 1.319 percent.
