Talking Points:
- British Pound continues to sink amid increasingly acute “Brexit” fears
- Japanese Yen gains as Asian stock exchanges follow Wall Street lower
- Risk aversion likely to remain as key driver for FX market price action
The British Pound underperformed in overnight trade, plunging to the lowest level in two months against the US Dollar. The move that likely reflects rising “Brexit” fears. The selloff appeared to follow on from an ORB poll released last week that showed a 55 to 45 percent preference for a UK exit from the EU and sent Sterling tumbling on Friday.
The Japanese Yen advanced as risk aversion gripped Asian financial markets, bolstering the anti-risk currency. The MSCI Asia Pacific regional benchmark index fell 1 percent, echoing Friday’s sharp drop on Wall Street. The slump in sentiment may reflect pre-positioning ahead of this week’s key event risk, with traders moving toward a more risk-neutral posture as a precaution.
Looking ahead, risk trends are probably going to remain at the forefront amid a lull in high-profile scheduled event risk. European and US stock index futures are pointing sharply lower, hinting that risk-off dynamics are likely to extend into the hours ahead. This maykeep the Yen well-supported while applying increasingly acute pressure on the sentiment-linked Australian, Canadian and New Zealand Dollars.
Track critical short-term trading levels for major currencies with the GSI indicator !
Asia Session
| GMT | CCY | EVENT | ACT | EXP | PREV |
|---|---|---|---|---|---|
| 23:50 | JPY | BSI Large All Industry (QoQ) (2Q) | -7.9 | - | -3.2 |
| 23:50 | JPY | BSI Large Manufacturing (QoQ) (2Q) | -11.1 | - | -7.9 |
| 02:00 | CNY | Industrial Production (YoY) (MAY) | 6.0% | 6.0% | 6.0% |
| 02:00 | CNY | Industrial Production YTD (YoY) (MAY) | 5.9% | 5.9% | 5.8% |
| 02:00 | CNY | Retail Sales (YoY) (MAY) | 10.0% | 10.1% | 10.1% |
| 02:00 | CNY | Retail Sales YTD (YoY) (MAY) | 10.2% | 10.2% | 10.3% |
| 02:00 | CNY | Fixed Assets Ex Rural YTD (YoY) (MAY) | 9.6% | 10.5% | 10.5% |
European Session
| GMT | CCY | EVENT | EXP | PREV | IMPACT |
|---|---|---|---|---|---|
| 07:00 | EUR | ECB’s Weidmann Speaks in Frankfurt | Low | ||
| 08:00 | CHF | Total Sight Deposits (JUN 10) | - | 493.5b | Low |
| 08:00 | CHF | Domestic Sight Deposits (JUN 10) | - | 418.2b | Low |
| 12:00 | EUR | ECB's Hansson Speaks on QE in Estonia Parliament | - | - | Low |
| 13:00 | EUR | ECB's Nouy Speaks at EU Parliament Committee | - | - | Low |
| 14:40 | EUR | ECB’s da Silva Costa speaks in Poland | Low |
Critical Levels
| CCY | Supp 3 | Supp 2 | Supp 1 | Pivot Point | Res 1 | Res 2 | Res 3 |
|---|---|---|---|---|---|---|---|
| EUR/USD | 1.1123 | 1.1198 | 1.1224 | 1.1273 | 1.1299 | 1.1348 | 1.1423 |
| GBP/USD | 1.3720 | 1.4012 | 1.4134 | 1.4304 | 1.4426 | 1.4596 | 1.4888 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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