Market Roundup
- USD/JPY +0.45%, GBP/USD +0.60%, EUR/USD +0.25%
- DXY -0.15%, DAX +0.02%, Nikkei +1.28%, Brent -0.9%, Iron +0.55%
- Switzerland May Trade Bal. CHF 3.786 bln vs rvsd 2.508 bln
- UK May PSNB m/m GBP9.141 bln vs rvsd 7.572 bln prev, 9.35 bln exp
- UK May PSNCR m/m GBP3.417 bln vs rvsd -2.043 bln prev
- GermanyJun ZEW Econ Sent 19.2 vs 6.4 prev, 4.7 exp
- Germany Jun ZEW Curr cond 54.5 vs 53.1 prev, 53.0 exp
- German constitutional court rejects challenge of ECB OMT scheme
- Soros – GBP fall post-Brexit to be bigger, more disruptive vs “Black Wed” – Guardian
- Japan FinMin Aso – Rapid FX moves undesirable, stability important
- Aso- won’t intervene in FX so easily, no comment on response to possible Brexit
- Foreigners’ stake in Japan Inc falls back below 30% - Nikkei
- IMF DepMD Lipton – Japan must take Abenomics even further – Nikkei
- Japan June Rtrs Tankan mfg idx +3, non-mfg +17, May +2, +19, +4, +20 exp in Sept
Economic Data Ahead
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
- (1845 ET/2245 GMT) The statistics New Zealand will release visitor arrivals report for the month of April. The indicator stood at 7.9 percent in the prior month.
Key Events Ahead
- (0900 ET/1300 GMT) European Central Bank President Mario Draghi's Speech.
- (1000 ET/1400 GMT) The U.S. Federal Reserve Chair Janet Yellen will testify before the Senate Banking Committee at a hearing entitled "The Semiannual Monetary Policy Report to the Congress."
- N/A Yellen, U.S. Treasury Secretary Jack Lew and Treasury Deputy Secretary Sarah Bloom Raskin attend open meeting of the Financial Stability Oversight Council in Washington.
- (1430 ET/1830 GMT) Federal Reserve Board Governor Jerome Powell gives introductory remarks before a roundtable on the Interim Report of Alternative Reference Rates Committee, in New York.
FX Beat
USD: The dollar index, against a basket of currencies declined to 93.60 as investors expect Federal Reserve Chair Janet Yellen to reiterate the current dovish stance.
EUR/USD: The euro edged up, but the upside was capped despite ZEW survey showing economic sentiment in the Eurozone above expectations. Eurozone's economic sentiment for the month of June came in at 20.2, surpassing expectations 15.3 and previous 16.8. The major trades at 1.1319, having touched a high of 1.1349 earlier in the session. Markets now await ECB President Draghi's speech and Fed Chief Janet Yellen's testimony. Immediate support is located 1.1283 (10-DMA), while on the upside, resistance is seen at 1.1349 (Session High).
USD/JPY: The Japanese yen lost ground against the dollar, as investors sentiment keeps improving as markets expect that Britain will vote to stay in the EU, given the recent opinion polls on the EU referendum pointing towards Bremain. The greenback rose 0.7 percent to 104.71, hovering towards 105 level. Investors will closely watch semi-annual testimony from Fed Chair Janet Yellen before the Senate Banking Committee in Washington, for fresh insights on the economy's outlook. Resistance is located at 105 level, break above targets 105.62. On the downside, support is seen at 103.58 (Session Low).
GBP/USD: Sterling touched a 7-week high against the dollar on rising expectations that Britons will vote to stay in the European Union. Two opinion polls released on Monday put the "Remain" camp ahead before Thursday's vote but another gave "Leave" a slight lead. Data published earlier in the day showed Britain’s public sector net borrowing for the month of May increasing to 9.141b GBP versus consensus of 9.350b GBP and prior 7.572b GBP. Sterling trades 0.5 percent higher at 1.4758 after going as high as 1.4781, hitting a seven-week peak. Immediate resistance is located at 1.4800 level, break above targets 1.4844. On the downside, support is seen at 1.4627 (Session Low). Against the euro, the pound edged up to 76.66 pence.
USD/CHF: The Swiss franc gained against the dollar, supported by upbeat trade balance data amid growing expectations of Bremain vote. The Swiss economy posted a trade surplus of 3786m sfr for the month of May versus previous 2508m sfr. The greenback declined 0.4 percent to 0.9579, pulling further away from a peak of 0.9686 touched last week. The resistance is located at 0.9640 (Previous Session High) and any break above will take the pair to next immediate resistance at 0.9690/0.9765. On the lower side, support is located at 0.9568 (May-5 Low), break below drag it lower 0.9550.
AUD/USD: The Australian dollar gained after the Reserve Bank of Australia gave no clear clue that it would ease policy again, combined with fading anxiety that Britain will leave the European Union. The Aussie rose as high as 0.7504, a high last seen on June 9. It eased to trade at 0.7494, up 0.5 percent on the day. Markets now focus on Fed Chair Janet Yellen's testimony, ahead of Australia's Westpac Leading Index. Immediate resistance is located at 0.7514, break above could take the pair till 0.7535. On the downside, support is seen at 0.7452 (Session Low).
NZD/USD: The New Zealand dollar touched 1-year high of 0.7160, on better risk appetite across currency markets. The kiwi rose for fifth consecutive session as easing Brexit worries continues to strengthen investor risk appetite for riskier asset. With the New Zealand economic calendar absolutely data empty for the day, the pair is likely to track the risk sentiment surrounding the Brexit referendum. Immediate resistance is located at 0.7160 (Session High), while support is seen at 0.7076 (5-DMA).
Equities Recap
European shares edge down after previous day's big gains as investors remain cautious on this week's UK-EU referendum.
The pan-European FTSEurofirst 300 stocks was down 0.1 percent, Germany's DAX down 0.2 pct, France's CAC 40 rose 0.1 pct and Britain's FTSE 100 fell 0.2 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.06 percent.
Tokyo's Nikkei gained 1.28 pct at 16,169.11, Australia's S&P/ASX 200 index rose 0.43 pct at 5,279.30 points and South Korean Seoul shares edged up 0.11 pct.
Shanghai composite index declined 0.4 pct at 2,878.56 points and CSI300 index dropped 0.2 pct at 3,106.32 points. Hong Kong’s Hang Seng index added 0.8 pct at 20,668.44 points.
Commodities Recap
Oil prices declined but held above the $50 barrel mark amid growing uncertainty over Britons vote to stay or leave the European Union. Brent crude August futures were trading at $50.23 at 1009 GMT, down 42 cents a barrel, while U.S. crude's expiring July front-month contract was down 45 cents at $48.92 a barrel.
Gold slumped for a second session on growing expectations that Britain would vote to remain in the European Union in a referendum later this week. Spot gold fell 0.7 percent to $1,280.12 an ounce by 1012 GMT, after earlier rising as high as $1,294.05. U.S. gold was down 0.4 percent at $1,286.50.
Treasuries Recap
The US Treasuries saw selling across the curve during a relatively quiet session that saw little data of much significance in the US. Overall, downward pressure largely stemmed from considerable gains seen in the EU referendum on behalf of those wishing to remain, undermining gains seen in recent sessions stemming from fears of Brexit-related volatility. The yield on the benchmark 10-year Treasury note rose 1-1/2 basis points to 1.685 percent and the yield on short-term 2-year Treasury note jumped nearly 1 basis point to 0.755 percent by 10:55 GMT.
The Eurozone government bonds plunged as the recent polls showed Brexit fears among investors started to fade, boosting risk sentiments. The benchmark German 10-year bonds yield rose 1 basis point to 0.069 percent, French 10-year bunds yield jumped 1-1/2 basis point to 0.447 percent, Italian equivalents inched higher nearly 3 basis points to 1.398 percent, Netherlands 10-year bonds yield moved up 1-1/2 basis points to 0.308 percent, Portuguese 10-year bonds yield bounced 3 basis points to 3.190 percent, Spanish 10-year bonds yield climbed 3 basis points to 1.518 percent and British 10-year bonds yield ticked 1-1/2 basis points higher to 1.257 percent by 10:00 GMT.
The UK gilts continue to trade lower after new polling data showed ebbing support for “Brexit” at this week’s UK EU membership referendum. The yield on the benchmark 10-year gilts rose 1 basis point to 1.249 percent and the yield on short-term 2-year note climbed nearly 2 basis points to 0.490 percent by 09:25 GMT.
The German bunds traded nearly flat as investors await Federal Reserve chair Janet Yellen's testimony to lawmakers and Britain's EU membership vote later this week. The yield on the benchmark 10-year bonds hovered around 0.062 percent mark, yield on super-long 30-year bonds rose 1 basis point to 0.663 percent and the yield on short-term 2-year note also remained steady at -0.579 percent by 09:10 GMT.
The Japanese government bonds traded nearly flat Tuesday, succumbing to thin trading activity as jittery investors looked ahead to Britain's vote on European Union membership and Fed
Chair Yellen’s semiannual monetary policy testimony. The yield on the benchmark 10-year bonds rose hovered around -1.14 percent and the short-term 2-year JGB yield remained steady at -0.244 percent by 06:25 GMT.
The Australian government bonds plunged as the latest polls by various corporate bodies in the United Kingdom on the June 23 Brexit referendum have reversed, with the percentage of citizens in favour of staying in the European Union outnumbering those who opposed it. The yield on the benchmark 10-year Treasury note rose 2-1/2 basis points to 2.170 percent and the yield on short-term 2-year note jumped 3-1/2 basis points to 1.681 percent by 05:20 GMT.
The New Zealand government bonds closed modestly lower as Brexit fears started to fade, boosting investor appetite for risk. The yield on benchmark 10-year bond rose 1/2 basis point to 2.555 percent.
