Market Roundup
- Polls on UK EU remain-leave towards New York close favor remain – Media.
- Sources - G7 to issue joint statement vowing to take necessary steps to calm markets if Britain votes to exit EU – Reuters.
- BoJ Policy Board Kiuchi – Additional effects of monetary policy diminishing, QQE de-merits steadily increasing, NIRP adversely affecting markets, less optimistic on growth, downside risks up – Reuters.
- MoF flow data week-ended June 18 – Japanese buy net Y72.4 bln foreign stocks, sell Y457.7 bln bonds, Y68.2 bln bills; foreign investors sell net Y231.1 bln Japanese stocks, Y485.9 bln bonds, buy Y1.4189 trln bills.
- Japan June PMI mfg – flash 47.8, May final 47.7, in contraction 4th month.
- MAS to include yuan in foreign reserves – Straits Times.
Economic Data Ahead
- (0245 ET/0645 GMT) France Jun business climate index, 103.0 eyed; last 104.0.
- (0300 ET/0700 GMT) France Jun PMI mfg – flash, 48.8 eyed; last 48.4.
- (0300 ET/0700 GMT) France Jun PMI services – flash, 51.7 eyed; last 51.6.
- (0300 ET/0700 GMT) France Jun PMI composite – flash, 51.0 eyed; last 50.9.
- (0330 ET/0730 GMT) Germany Jun PMI mfg – flash, 52.0 eyed; last 52.1.
- (0330 ET/0730 GMT) Germany Jun PMI services – flash, 55.0 eyed; last 55.2.
- (0330 ET/0730 GMT) Germany Jun PMI composite – flash, 54.2 eyed; last 54.5.
- (0400 ET/0800 GMT) Eurozone Jun PMI mfg – flash, 51.3 eyed; last 51.5.
- (0400 ET/0800 GMT) Eurozone Jun PMI services – flash, 53.1 eyed; last 53.3.
- (0400 ET/0800 GMT) Eurozone Jun PMI composite – flash, 53.0 eyed; last 53.1.
- (0400 ET/0800 GMT) Italy Apr industrial orders/sales; last -3.3/-1.6% m/m, +0.1/-3.6% y/y.
- (0500 ET/0900 GMT) Italy May trade balance – non-EU – flash; last E3.6 bln surplus.
- (0830 ET/1230 GMT) United States May Chicago Fed national activity index; last 0.1.
- (0830 ET/1230 GMT) United States w/e initial jobless claims, 270k eyed; last 277k.
- (0900 ET/1300 GMT) Belgium Jun leading indicator, -3.0 eyed; last -2.8.
- (0945 ET/1345 GMT) United States Jun Markit PMI mfg – flash, 50.8 eyed; last 50.7.
- (1000 ET/1400 GMT) United States May leading indicators index, +0.1% m/m eyed; last +0.6%.
- (1000 ET/1400 GMT) United States May new home sales, 560k AR, -8.7% m/m eyed; last 620k, +16.6%.
- (1100 ET/1500 GMT) United States Jun KC Fed manufacturing/composite indices; last -11, -4.
Key Events Ahead
- N/A UK EU referendum, polls open at 06:00 GMT/close at 21:00 GMT.
- N/A ECB General Council meeting.
- (0400 ET/0800 GMT) Norges Bank policy announcement, no change in 0.5% depo rate eyed.
- (0415 ET/0815 GMT) ECB Nouy speaks at Frankfurt conference/RBA DeBelle speaks in Sydney.
- (0530 ET/0930 GMT) ECB 1456-day TLTRO at zero%.
- (0700 ET/1100 GMT) ECB Mersch speaks at Paris Natixis conference.
- (0900 ET/1300 GMT) Ireland FinMin Noonan, CB Murphy speak at Dublin conference.
- (1900 ET/2300 GMT) Dallas Fed Kaplan speech at NYU.
FX Beat
USD: The dollar index, against a basket of currencies declined to 93.46, as markets brace for Britain's vote on its fate in in the European Union.
EUR/USD: The euro extended gains, as sentiment remains underpinned amid hopes of a Britain voting to stay in the European Union. The major trades 0.3 percent higher at 1.1336, hovering towards a high of 1.1349 touched earlier in the session. The pair strengthened after latest opinion poll showed Remain in the lead and boosted the Bremain sentiment. The YouGov online poll showed Remain at 51 percent and Leave 49 percent, while ComRes phone poll indicated Remain at 48 percent and Leave 42 percent. Looking ahead, markets attention will remain on the poll which have opened at 0600 GMT, followed by economic data releases from eurozone economies and United States. Immediate resistance is located at 1.1349 (Session High), break above will take it till 1.1382. On the lower side, support is seen at 1.1268.
USD/JPY: The demand for the perceived safe-haven yen remained broadly intact with the dollar edging down to 104.33 yen. Data released earlier showed that Japan's preliminary Nikkei manufacturing PMI for the month of June came in at 47.8, missing expectations of 48.2, however above previous 47.7. Leading economic index for the month of April edged up to 100 from 99.1, while coincident index for April rose to 112 from prior 110.2. Further upside in the major is limited as markets remain cautious heading into the EU’s membership polls. Immediate resistance is located at 105 level, break above will take it till 105.12/105.50. On the lower side, support is seen at 104.04 (Jun-17 Low).
GBP/USD: Sterling rose to a 6-month high against the dollar after the latest polls showed Bremain in lead, just hours before referendum voting was due to open. The major has gained almost three percent so far this week, supported by reduced Brexit fears. Sterling was trading 0.6 percent higher at 1.4799 after touching 1.4842, its highest since the beginning of the year. The polling will be conducted between 0600-2100 GMT, with the outcome expected to trigger massive GBP moves. Immediate resistance is located at 1.4842 (Session High), while support is seen at 1.4636 (5-DMA).
AUD/USD: The Australian dollar touched a 7-week high, supported by gains in oil and iron ore prices. The Aussie trades 0.4 percent higher at 0.7528, having gone as high as 0.7532, level last seen since May 3. With the Australian economic calendar absolutely data empty, the movement in the pair will be driven by developments surrounding the EU referendum. Immediate resistance is located at 0.7550 level, while on the downside support is seen at 0.7466 (5-DMA).
NZD/USD: The New Zealand dollar rallied to 1-year high on the back of broad based greenback weakness and rallying oil prices. The Kiwi rose 0.5 percent to 0.7194, a level last seen early June. The major continues to rise as risk sentiment picked up pace on higher oil prices and after latest Brexit polls showed the Remain camp in lead. Immediate resistance is located at 0.7200 level, while on the downside, support is seen at 0.7126 (5-DMA).
Equities Recap
Asian shares rose as risk aversion sentiment eased slightly, while markets nervously await the British poll results.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent.
Tokyo's Nikkei rose 1.07 pct at 16,238.35, Australia's S&P/ASX 200 index gained 0.29 pct at 5,286.10 points and South Korea’s Kospi declined 0.30 pct.
Shanghai composite index trades 0.4 pct lower at 2,893.88 points and CSI300 index lost 0.5 pct at 3,119.38 points.
Hong Kong’s Hang Seng trades 0.3 higher at 20,849 points. Taiwan stocks dropped 0.5 pct at 8,676.68 points.
Commodities Recap
Oil prices edged up after the U.S. government reported inventory had reducted, and as investors remain cautious about Britain's upcoming vote on whether to stay or leave the European Union. Brent crude oil was up at $50.13 a barrel, having touched a low of $49.16 in the previous session. U.S. crude futures initially rose to a session high of $50.22 a barrel before declining to a settlement of $49.13, though were still up slightly versus the previous close of $48.85.
Gold touched a fresh 2-week low as investors expect British voters would vote to stay in the European Union at referendum later in the session, thereby strengthening equity shares and reducing risk aversion. Spot gold was trading flat at $1,265.45 an ounce by 0426 GMT, having touched a low of $1,259.52 earlier in the session, its worst level since June 9. U.S. gold was down 0.4 percent to $1,265.30.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.7025 percent up by 0.015 bps, while 5-year was 0.013 bps up at 1.2171 percent.
Japanese government bonds held firm, with 10-year bonds yielding 0.13 percent while the spread between 10 and 2-year debt holding firm at 95 basis points.
The Australian government bonds plunged ahead of the outcome of the Brexit poll later today which will decide whether Britain would remain in the European Union or not. The yield on the benchmark 10-year Treasury note rose nearly 3 basis points to 2.257 percent and the yield on short-term 2-year note jumped more than 1 basis point to 1.736 percent.
The New Zealand government bonds market closed mixed on Thursday with investors treading water as the final Brexit countdown begins. The yield on benchmark 10-year bond rose 1/2 basis point to 2.620 percent, yield on 7-year note dipped 1/2 basis point to 2.300 percent and the yield on 5-year bond also fell 1/2 basis point to 2.240 percent.
Canadian government bond prices were higher across the maturity curve, with the 2-year price up 2 Canadian cents to yield 0.598 percent and the benchmark 10-year rising 19 Canadian cents to yield 1.232 percent.
