Market Roundup
- GBP/USD above 1.49 first time since Dec: 1.4944 the high
- GBP/USD +1.4%, USD/JPY +0.65%, EUR/GBP -0.6%, EUR/NOK -0.6%
- DXY -0.5%, DAX +2.25%, Brent +1.6%, Iron +1.70%, Gold +0.04%
- Germany Jun Mfg PMI Flash 54.4 vs 52.1 previous, 52.0 exp
- Eurozone Jun Flash Mfg PMI 52.6 vs 51.5 previous, 51.3 exp
- Eurozone Jun Flash Service PMI 52.4 vs 53.3 previous, 53.1 exp
- Norgesbank unchanged, in line: Removes NIRP from rate path
- Sources - G7 to issue statement vowing steps to calm mkts if Brexit
- BoJ Policy Board Kiuchi – Additional effects of monetary policy diminishing
- 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
- (0830/1230) New applications for U.S. unemployment benefits is likely to have decreased 7,000 to a seasonally adjusted 270,000 for the week ended June 18, while continuing claims for the week ending June 10 is expected to have declined to 2.150m from 2.157m.
- (0900 ET/1300 GMT) Mexico's statistics institute releases data on consumer prices in the first half of June. Consumer prices are likely to have gained 0.11 percent, after declining 0.48 percent during the first half of May. The core price index is expected to have increased 0.14 percent after edging up 0.08 percent in early May.
- (1000 ET/1400 GMT) The U.S. Commerce Department is likely to report that new home sales declined 8.7 percent in May to a seasonally adjusted annual rate of 560,000 units, after advancing 16.6 percent to a rate of 619,000 units in April, the highest level since January 2008.
- (1000 ET/1400 GMT) The Conference Board releases its Leading Indicator, a gauge of future U.S. economic activity, for the month of May. The index is expected to have gained 0.1 percent from 0.6 percent in April.
- (1030 ET/1430 GMT) The Energy Information Administration reports its Natural Gas Storage for the week ending June 17.
- (1100 ET/1500 GMT) Federal Reserve Bank of Kansas City also issues composite and manufacturing outlook indices for June.
- (1500 ET/1900 GMT) The Argentine government is due to release trade balance data for the month of May and the current account figures for the first quarter.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 30-year Ginnie Mae max $1.175 bln.
- (0600 GMT-2100 GMT) Britain, Europe's biggest financial center, votes on whether to leave the European Union.
- (1900 ET/2300 GMT) Federal Reserve Bank of Dallas President Robert Kaplan speaks on "Economic Conditions and the Role of Monetary Policy" at the Money Marketeers of New York University event in New York.
FX Beat
USD: The dollar index, against a basket of currencies trades lower at 93.22, having touched a low of 93.02 earlier in the session.
EUR/USD: The euro rallied above the 1.1400 level, supported by the persistent risk-on sentiment. The euro trades 0.8 percent higher at 1.1391, after going as high as 1.1420 earlier in the session. Traders ignored the economic releases amid growing anxiety over the UK referendum. Eurozone's preliminary Markit manufacturing PMI for the month of June rose to 52.6 against consensus and previous 51.5, while Markit composite PMI and services PMI declined 52.8 and 52.4, respectively. The momentum in the pair is largely driven by developments around the UK Referendum. The short term bullishness can happen only if it breaks above 1.1420 (Jun-9 High) and any break above 1.1420 will take the pair to next level 1.1466 (Apr-12 High) /1.1505/1.1617 (May-3 High). On the lower side, major support is 1.310 (21 4H MA) and break below targets 1.1235 (Jun-21 Low)/1.1200/1.1130 (Jun-6 Low).
USD/JPY: The Japanese yen slumped as the dollar was strengthened by persistent risk sentiment amid increased expectations that the Britain will remain in the European Union. The greenback rose above the 105.00 handle, to trade 1.2 percent higher at 105.64. The short term trend is slightly bullish as long as support 103.50 holds. The minor resistance is around 106 and any break above confirms minor trend reversal, a jump till 106.60/107 is possible. On the lower side minor support is around 103.50 and any close below 103.50 will drag the pair till 102.80.
GBP/USD: Sterling hit a 2016 high against the dollar after the last opinion poll conducted before voting favored Britain remaining in the European Union. Poll by IPSOS MORI showed a last-minute 4 piont lead support for Britain to remain in the EU. The polling will close at 2100 GMT, with results expected early on Friday. Sterling rose as high as 1.4946 and was trading 1.1 percent higher at 1.4872 for the day. On the higher side, major resistance is around 1.4950 and any break above 1.4950 will take the pair till 1.500/1.5250. On the lower side, any break below 1.4700 will drag it till 1.4640/1.4600. It should break below 1.46000 for further weakness. Against the euro, the pound was trading 0.2 percent higher at 76.63 pence.
USD/CHF: The Swiss franc rose as the dollar was weighed down by broad based selling pressure, expect against the yen. The greenback was trading 0.2 percent lower at 0.9554, having touched a low of 0.9521 earlier in the session. On the downside, firm break below 0.9500 confirms rebound from 0.9578 has ended and a further decline till 0.9445/0.9400 is possible. The major resistance is at 0.9580 and any break above will take the pair to next immediate resistance at 0.9640/0.9690. The price should break above 0.9780 for further bullishness.
AUD/USD: The Australian dollar gained, facilitated by stronger risk appetite. Markets sentiment were strengthened after two opinion polls showed the "Remain" camp ahead of the "Leave" camp, just hours before UK voters begin to cast their votes. The Aussie was last trading 1 percent higher at $0.7571, having touched a 6-week high of 0.7597, a level last seen on May 3. On the higher side, resistance is located at 0.7600 and any break above major resistance will take the pair till 0.765/0.7680. The major support is around 0.7500 and break below will drag it till 0.7440/0.7370.
NZD/USD: The New Zealand dollar rose above the 0.7200 level, supported by rising oil prices and stronger risk sentiment after latest round of Brexit polls showed an overall lead for the ‘remain’ camp. The Kiwi trades 1 percent higher at 0.7228, having touched 2016 high of 0.7253, a level since end of May 2015. Immediate resistance is located at 0.7253 (Session High), while on the downside, support is seen at 0.7134 (5-DMA).
Equities Recap
European shares rallied, while world stocks advanced for a fifth consecutive day, as British voters headed to the polls for a crucial vote on their European Union membership.
MSCI's 46-country All World index gained, while MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.3 percent.
Europe's FTSEurofirst 300 rose 1.8 pct, its highest intraday point since May 31, Germany's DAX gained 2.2 pct, France's CAC advanced 2.1 pct and Britain's FTSE 100 added 1.4 pct.
Tokyo's Nikkei gained 1.07 pct at 16,238.35, Australia's S&P/ASX 200 index added 0.29 pct at 5,286.10 points and South Korea's Kospi declined 0.30 pct.
Shanghai composite index and CSI300 index both closed down 0.5 pct at 2,891.96 points and at 3,117.32 points, respectively. Hong Kong's Hang Seng index rose 0.4 pct at 20,868.34 points.
Commodities Recap
Oil prices gained, waving off a smaller than expected reduction in U.S. crude stocks as equity markets rose on the last opinion polls showing Britons favored to remain in the European Union. Global benchmark Brent crude was trading up at $50.73 a barrel by 1042 GMT, while U.S. futures stood at $49.39, up 26 cents day on day.
Gold declined, having touched a fresh 2-week low as investors remain optimistic that British voters would vote to stay in the European Union. Spot gold was down 0.4 percent at $1,258.90 an ounce by 1045 GMT, having touched a low of $1,257.50 earlier in the session.
Treasuries Recap
The US Treasuries saw selling across the curve as the recent poll by Ipsos Mori showed Brexit fears among investors started to fade, boosting risk sentiments. The yield on the benchmark 10-year Treasury note rose more than4 basis points to 1.728 percent and the yield on short-term 2-year note jumped 1-1/2 basis points to 0.767 percent by 11:25 GMT.
The UK gilts continue to trade lower as investors were guardedly optimistic about a "Remain" vote in Britain's make-or-break European Union referendum. The yield on the benchmark 10-year gilts rose more than 4 basis points to 1.357 percent, yield on super-long 40-year bonds rose nearly 5 basis points to 1.986 percent and the yield on short-term 2-year note climbed nearly 3 basis points to 0.527 percent by 10:00 GMT.
The German bunds were little changed on Thursday, with traders focusing on today's referendum on whether Britain will remain part of the European Union. It is expected to stay in the middle of a 0.00-0.10 percent range on Thursday. Then on Friday when the main European risk event of the year comes to a head, we see the Bund yield to move up into a 0.10 to 0.20 percent range if the vote is to Remain in the UK, and fall back below zero, to -0.05 percent upon a Brexit decision. The yield on the benchmark 10-year bonds hovered around 0.06 percent mark, yield on super-long 30-year bonds rose 1/2 basis point to 0.659 percent and the yield on short-term 2-year note also remained steady at -0.577 percent by 09:00 GMT.
The Japanese government bonds traded mixed as millions of Britons begin voting in historic EU referendum for the second time after 1975 referendum. Also, the recent polls showed the outcome of the referendum is expected to be too close to call. The yield on the benchmark 10-year bonds rose nearly 1 basis point to -1.130 percent, yield on super-long 40-year bonds dipped more than 2 basis points to 0.271 percent and the short-term 2-year JGB yield bounded 1/2 basis point to -0.233 percent by 06:40 GMT.
The New Zealand government bonds market closed mixed 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.
The Australian government bonds plunged ahead of the outcome of the Brexit poll later today which will decide whether Britian would remain in the European Union or not. Also, investors cooled on safe-haven instruments amid gains in riskier assets including crude oil and equities. The RBA's neutral stance on Tuesday June meeting minutes discouraged investors from safe-haven buying. The yield on the benchmark 10-year Treasury note, which moves inversely to its price 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 by 05:00 GMT
