Market Roundup
- UK EU referendum 51.9% leave vs 48.1% remain
- UK PM Cameron says to stand down before Oct Tory conference
- GBP/USD falls over 10% to 1.3228 before recovering to 1.3972
- EUR/GBP trades 0.8315 high vs 0.7600 low
- GBP/JPY 133.38 low from 160.10 then back to 144.06
- FTSE-100 slumps 8.67% on Brexit then recovers 5.3% to 6097 vs 5788 low
- Brexit result broadly credit negative for most UK sectors-Fitch/Moody’s
- Trump-Britons took back control of their country by voting to leave EU
- Ladbrokes-Boris Johnson even money favourite to succeed Cameron
- BoE Carney ready to provide GBP250 bln of additional funds as a backstop+
- Germany Jun IFO Exp. 103.1 vs 101.6 prev, 101.2 exp
- Germany Jun IFO Bus. Climate 108.7 vs 107.8 revised and 107.5 exp
- Germany Jun IFO Curr Conditions 114.5 vs 114.2 previous, 114.00 exp
- SNB confirms CHF intervention-EUR/CHF 1.0623 low to 1.0865
- Risk hit hard by Brexit: USD/ZAR up over 8% before coming easier
- Japan's Aso: to coordinate with G7 in response to market moves after Brexit
- Japan PM Abe: Concerned over Brexit risks to world economy, FX
- Japan FinMin Aso – No comment on any joint G7 intervention
- Aso will respond as needed, concerned over effects of Brexit vote
- Japan govt – Volatile FX moves undesirable, stability extremely important
- Japan ruling coalition headed for hefty win in Upper House poll – Media
- Dallas Fed Kaplan drops call for near-term rate hike
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Commerce Department is likely to report that durable goods orders dropped 0.5 percent in the month of May, from 3.4 percent in April.
- (1000 ET/1400 GMT) The University of Michigan is expected to report that the final consumer sentiment index stood at 94.0 in June compared with a preliminary reading of 94.3.
- (0900 ET/1300 GMT) Mexico's retail sales are likely to have declined 0.72 percent in the month of April, compared with a 3.0 percent rise in March.
- (0930 ET/1330 GMT) Brazil is likely to report an unexpected current account surplus of $1.904 billion for May, after posting a current account surplus of $412 million for April.
- (0930 ET/1330 GMT) Brazil is expected to have attracted $5.8 billion in foreign direct investment in May, compared to $6.8 billion it received in April.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 15-year Fannie Mae/Freddie Mac max $725 mln.
FX Beat
USD: The dollar index, against a basket of currencies trades higher at 95.80, having touched a peak of 96.70, its highest since mid-March.
EUR/USD: The euro declined to 1.0911, a low last seen in March, before recovering to 1.1046, still down 2 percent on the day. It was under pressure against most other currencies as investors feared Brexit could fuel anti-establishment movements in other European economies. The short term bullishness can happen only if pair closes above 1.1100 (200 day MA) and any break above 1.1100 will take the pair to next immediate resistance around 1.1188/1.12314. On the lower side, major support is 1.1000 and any break below targets 1.0900/1.0804.
USD/JPY: The Japanese yen gained against the dollar, supported by risk-aversion sentiment as Briton's voted to leave the European Union spurred financial turmoil. The greenback fell as low as 98.82, hovered it recovered to trade above the 102 level on expectations that the BoJ might intervene after the sharp yen’s rise. It was last trading 3.6 percent lower at 102.33 yen. The short term trend is slightly bearish as long as support 103.50 holds. The minor resistance is around 103.50 and any break above confirms minor trend reversal, a jump till 105/105.80 is possible. On the lower side minor support is around 102 and any break below 102 will drag the pair till 98.80/98.
GBP/USD: Sterling declined 10 percent after Britain voted to leave the European Union, triggering a global turmoil. British Prime Minister David Cameron, who campaigned to stay in the EU, confirmed he will step down by October. Sterling trades 7.7 percent lower at 1.3688, after declining more than 10 percent to $1.3226, it’s lowest since September 1985. On the higher side, major resistance is around 1.4000 and any break above 1.4000 will take the pair till 1.41255/1.4240/1.4335. On the lower side any break below 1.3650 will drag it till 1.3500/1.3220. Against the euro, the pound trades 5.7 percent lower at 80.80 pence.
USD/CHF: The Swiss franc lost ground after the Swiss National Bank confirmed it was intervening in the foreign exchange market to weaken the currency. The greenback trades 1.8 percent higher at 0.9751, having touched a 3-week week high of 0.9802. The major faces strong resistance around 0.9830 and any break above targets 0.9870/0.9900. On the lower side major intraday support around 0.9680 and any break below targets 0.9630/0.9580/0.9550. Overall bullish invalidation is only below 0.9500. Any break below this level will drag the pair down till 0.9445/0.9370.
AUD/USD: The Australian dollar declined after Britain voted to leave the EU, however it regained some ground to trade above 0.7400 level. The Aussie trades at 0.7414, having dropped to 0.7304 from a high of 0.7647. On the higher side, the major is facing resistance at 0.7420 and any break above major resistance will take the pair till 0.7510/0.7580. The support is around 0.7280 and break below will drag it till 0.72500/0.72000.
NZD/USD: The New Zealand dollar reversed gains, after Britain's vote to leave European Union. The major declined as markets rushed towards safe-haven assets, such as yen and gold amid global turbulence. The kiwi trades 2.1 percent lower 0.7087, but away from a low of 0.6970 struck earlier in the session. On the higher side, resistance is located at 0.7300, while on the down side, support is located at 0.6970 (Session Low), break below could drag the pair lower 0.6950 level.
Equities Recap
World shares headed for one of their biggest fall on record as Britain's vote to leave the European Union resulted in a financial market turmoil.
MSCI's broadest index of Asia-Pacific shares outside Japan slid almost 5 percent.
Europe's FTSEurofirst 300 skidded 8.3 pct, Germany's DAX slumped 10 pct, France's CAC 40 lost 8 pct and Britain's FTSE slumped 7.1 pct.
Tokyo's Nikkei slumped 7.92 pct at 14,952.02, Australia's S&P/ASX 200 index declined 3.30 pct at 5,106.60 points and South Korea's Kospi 200 dropped 3.21 pct.
Shanghai composite index and CSI300 index both declined 1.3 pct at 2,854.29 points and at 3,077.16 points, respectively. Hong Kong's Hang Seng index lost 2.9 pct at 20,259.13 points.
Commodities Recap
Oil prices declined by more than 6 percent after Britain voted to leave the European Union, raising fears of a broader economic slowdown that could reduce demand. Brent crude was down 5 percent at $48.35 a barrel at 1047 GMT, having fallen as low as $47.52. U.S. crude was down $2.39 at $47.72 a barrel.
Gold price rallied after Britons voted to leave the European Union, fueling market turmoil that drove investors toward safe-haven assets. Spot gold was up 5.2 percent at $1,321.37 an ounce by 1054 GMT, after touching $1,358.08, the strongest since March 2014. U.S. gold for August delivery rose 4.7 percent to $1,322.80.
Treasuries Recap
The US Treasuries complex saw widespread gain across the curve after the United Kingdom voted to end 43 years of European Union membership after a bitterly divisive referendum campaign that ended dramatically Friday with the resignation of the prime minister, plummeting global markets and the potential dismantling of a political project that was designed to ensure peace and security for a continent ravaged by two world wars. The yield on the benchmark 10-year Treasury note fell more than 26 basis points to 1.478 percent and the yield on short-term 2-year note jumped 21 basis points to 0.558 percent by 10:51 GMT.
The Eurozone periphery bonds plunged after the United Kingdom voted in favor of leaving the European Union in an unprecedented vote, triggering a worldwide selloff in lower-rated debt and equities and a flight to haven investments such as German bunds. The 10-year Italian sovereign bond inched higher 7-1/2 basis points to 1.400 percent, Portuguese 10-year bonds yield bounced 14 basis points to 3.242 percent, Spanish 10-year bonds yield climbed 7 basis points to 1.550 percent by 09:45 GMT.
The UK gilts yield fell to an all-time low after Britain has voted to leave the European Union after 43 years in an astonishing referendum that threatens the breakup of the nation. Also, rising possibilities of further policy easing form the Bank of England drove investors towards safe-haven buying. The yield on the benchmark 10-year gilts fell more than 30 basis points to 1.074 percent, yield on super-long 40-year bonds dipped nearly 27 basis points to 1.924 percent and the yield on short-term 2-year note slid 23 basis points to 0.294 percent by 07:40 GMT.
The German 10-year bund yield fell to an all-time low of minus 0.24 percent in the Asian session after Britain has voted to leave the European Union in an historic referendum which has thrown Westminster politics into disarray and sent the pound tumbling on the world markets. The yield on the benchmark 10-year bonds fell more than 21 basis points to -0.122 percent, yield on super-long 30-year bonds dipped nearly 30 basis points to 0.453 percent and the yield on short-term 2-year note tumbled 9 basis points to -0.650 percent by 07:00 GMT.
The Japanese 30-year bond yield fell to record low of 0.145 percent as voters have voted in favour of Brexit, U.K. is poised to leave the European Union after 43 years of membership in the bloc. Also, investors are pricing monetary and quantitative easing from the Bank of Japan in the up-coming policy meeting. 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 by 06:10 GMT.
The New Zealand government bonds market closed higher as Britain has voted to leave the European Union, with the Leave campaign securing around 51.9 per cent of the vote. Also Prime Minister David Cameron will address the nation shortly, is now facing calls to resign as Prime Minister. The yield on benchmark 10-year bond fell 1-1/2 basis point to 2.390 percent, yield on 7-year note also dipped 1-1/2 basis point to 2.090 percent and the yield on short-term 2-year note tumbled 1 basis point to 2.020 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 points to 1.558 percent by 05:20 GMT.
