Market Roundup
- YouGov/Sunday Times poll – 42% to vote “remain”, 43% “leave”.
- Opinium/Observer poll – 44% would vote “remain”, 42% “leave”.
- Japan ChiefCabSec Suga – Eyeing very volatile moves in Japanese stocks, long-term interest rates and FX, eyeing UK referendum affect on markets.
- Japan MoF/ESRI Q2 big mfg sentiment index -11.1, Q1 -7.9, +7.0 eyed for Q3, +7.1 in previous survey, FY ‘16/17 CAPEX +3.8%, -6.6% in previous survey.
- Abenomics doubts drive foreigners off Japan stocks, volatility spikes.
- Angry banks complicate BoJ’s ability to deepen negative rates – Reuters.
- China Stats Bureau – Downward pressures still, working to achieve targets, will push forward supply-side reforms, need to open state sector – Reuters.
- China May industrial output +6.0% y/y, +5.9% eyed
- China May retail sales +10.0% y/y, +10.1% eyed.
- China Jan-May fixed asset investment +9.6% y/y, +10.5% eyed, property +7.0%, private-sector fixed asset investment +3.9%.
- China May revenues +7.3% y/y, expenditures +17.6, Jan-May +8.3%, +13.6%.
Economic Data Ahead
- No significant economic data scheduled
Key Events Ahead
- Australia Queen’s Birthday holiday.
- N/A 6th European Financial Congress in Sopot, Poland (till the 15th).
- N/A Italy FinMin Padoan, Slovak FinMin Kazimir meeting in Bratislava.
- N/A Norwasy NOK6 bln 12-month NST35 treasury bill auction.
- (0300 ET/0700 GMT) ECB/Buba Weidmann speaks at Frankfurt Cash Symposium.
- (0500 ET/0900 GMT) Italy E1.5-2/2.5-3/1.5-2/1bln 0.1/0.95/4.75/2.7% 2019/23/44/47 BTP sales.
- (0530 ET/0930 GMT) Germany E3 bln 6-month Bubill auction.
- (0855 ET/1255 GMT) France E3.1-3.5/1.1-1.5/0.8-1.2 bln 3/6/12-month BTF note auctions.
- (0900 ET/1300 GMT) ECB Nouy parliamentary testimony in Brussels.
- (1000 ET/1400 GMT) OECD Gurria presents latest Canada survey.
- (1500 ET/1900 GMT) Canada FinMin Morneau press conference in Montreal.
FX Beat
USD: The dollar index, against a basket of currencies was trading lower at 94.53, hovering towards an early low of 94.49 as markets narrowed down their expectation for an imminent U.S. Federal Reserve interest rate hike.
EUR/USD: The euro declined to 1.1232, its lowest since June 3, giving up more than a half its gains made after disappointing U.S. employment data on that day. However, it attempted a minor recovery, to trade 0.1 percent higher at 1.1263, amid persistent risk-averse market conditions. The pair continues to rise, hovering towards session high of 1.1255. The major is expected to be driven by broader market sentiment in absence of macro-fundamental data amid thin markets. Immediate resistance is located at 1.1274 (10-DMA), break above could take the pair near 1.1300 level. On the lower side, support is seen at 1.1214 (May-18 Low), break below targets 1.1187.
USD/JPY: The Japanese yen rallied against the dollar, supported by heightened risk aversion on worries about Brexit and worries over political fallout from the rise of presidential candidate Donald Trump. The greenback breached the 106 level, declining nearly 1 percent to 105.81, a level last seen since May 3. It last stood at 105.90 yen, down 0.9 percent so far on the day. Markets now await for Bank of Japan policy meeting, where traders expect the central bank to keep its policy on, however, perception could change if the dollar falls below its 18-month low of 105.55 set on May 3. Immediate support is seen at 105.81 (Session Low), break below targets 105.54 (May-3 Low). On the upside, resistance is located at 107 level.
GBP/USD: Sterling declined to an 8-week low against the dollar ahead of a referendum that could pull Britain out of the European Union. Opinion polls published on Saturday showed British voters were still closely divided over whether to leave the European Union or to stay. The British pound, which lost 1.4 percent on Friday, its second biggest fall so far this year, shed another 0.5 percent to 1.4191. It dropped to as low as 1.4158, its weakest since April 18. Immediate support is located at 1.4158 (Session Low), break below targets 1.4131/1.4090. On the higher side, resistance is seen at 1.4290, break above will take the pair over 1.4300 level.
AUD/USD: The Australian dollar held steady as investors were reluctant in taking major positions amid Brexit fears and ahead of key central bank meetings this week. The Aussie was trading 0.2 percent higher at 0.7398, pulling away from a low of 0.7359 struck earlier in the session. The trading was subdued in the major as Australian financial markets were closed in observance of the Queen's Birthday. Following a 2-day sell off, the recovery in the pair was fragile amid risk-off sentiments. With the U.S. economic calendar absolutely data-empty, markets now focus on the FOMC and BOJ policy decision due out in the week ahead. Immediate resistance is located at 0.7424 (5DMA), break above targets 0.7450. On the downside, support is seen at 0.7335 (May-11 Low).
NZD/USD: The New Zealand dollar trades 0.1 percent lower at 0.7043, hovering towards session low of 0.7031 and away from a high of 0.7147 struck last week. Markets attention will now remain on U.S. Federal Reserve policy meetings later this week, after a weak jobs report reduced expectations of an imminent rate hike. Immediate support is seen at 0.7031 (Session Low), break below could take the pair lower 0.7000 level. On the upside, resistance is located at 0.7122 (Friday High).
Equities Recap
Asian shares declined the most in over two months as investors rushed towards safe-havens before key central bank meetings this week and as nervous investors awaited a referendum that could see Britain exiting the European Union.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped 1.6 percent, its biggest daily fall since April. 5.
Australian markets are closed in observance of the Queen's Birthday.
Tokyo's Nikkei slumped 3.51 pct at 16,019.18, while Seoul shares lost 1.91 pct.
Taiwan stocks declined 2.1 pct at 8,536.22 points and Hong Kong’s Hang Seng was trading 2.79% lower at 20,450 points.
Shanghai composite index dropped 2.0 pct at 2,866.30 points and CSI300 index also lost 2.0 pct at 3,098.09 points.
Commodities Recap
Oil prices declined, weighed down by growing economic concerns. International Brent crude oil futures dropped back below $50 per barrel, trading at $49.90 at 0452 GMT, down 1.1 percent, from their last settlement. U.S. West Texas Intermediate crude was down 78 cents at $48.29 a barrel.
Gold touched a near 4-week high, facilitated by weaker Asian stocks as investors turned towards safe haven-assets ahead of this week's central bank meetings and Britain's June 23 referendum on its European Union membership. Spot gold was flat at $1,274.60 an ounce by 0455 GMT, after hitting a session high of $1,278.26, its highest since May 18. U.S. gold was up 0.1 percent at $1,276.50.
Treasuries Recap
The 10-year U.S. treasury yield stood at 1.6215 percent down 0.018 bps, while the 5-year yield was down 0.025 bps at 1.1396 percent.
Japan government bond yields declined, with the 30-year yield down to record low of 0.245 pct, while the benchmark 10-year JGB yield dropped to record low of minus 0.165 percent. The 5-year yield fell below minus 0.265 pct to new record low.
New Zealand government bonds gained, pushing yields as much as 8.5 basis points lower at the long end.
Canadian government bond prices rose across the maturity curve. The 2-year price rose 4.5 Canadian cents to yield 0.493 percent and the benchmark 10-year climbed 62 Canadian cents to yield 1.119 percent, touching its lowest since Feb. 25. The curve flattened, as the spread between 2-year and 10-year yields narrowed to 62.3 basis points, indicating outperformance for longer-dated maturities.
