Markets in Negative Ahead of Key Week

Markets turned negative on Friday on back of increased uncertainty following new polls from the Brexit referendum showing a majority in favour of a leave. US markets fell with energy and financials taking the S&P 0.9% lower and not managing to close above trend resistance projected from the all-time highs. The USD rose across the board, expect against the JPY with USDJPY now eyeing the 2016 lows at 105.55. Fixed income rose as investors allocated into safe haven. USD-denominated commodities fell with oil back below $49/barrel, while gold spot took another step higher for the third week in a row on back of the global uncertainty. 1308 acts a key resistance.

Overnight Australia was closed for the Queen’s Birthday, but will probably gap lower tomorrow on back of the weaker than expected Chinese Retail Sales and Fixed Asset Investments. Although the yearly Industrial Production surprised slightly to the upside, the focus is for the Fixed Asset Investments coming out at 16-year lows and could most likely trigger additional stimulus from the PBOC.

Fixed Asset Investments Growth in % 1997-2016

20160613 - China Fixed Asset growth

With the increasing uncertainty in global markets, the USD has been considered the safe haven of currencies and we are so far seeing the same picture despite recent speculation that the Fed will not raise interest rates in the near term. EUR/USD closed below the 50-day SMA and shows a similar picture on the 4h-chart with price action caught in between the 50- and 100-SMA.

EURUSD Daily

20160613 - EURUSD.Daily

 

From the UK, risk aversion was present on Friday with the FTSE closing below the 100-day SMA – not seen since late February 2016. Key support at 6050 before 6000.

FTSE Daily

20160613 UK100Daily

 

Today, we do not have interesting data points in the calendar, but tomorrow the UK Inflation figures will be interesting along with the Euro Zone Industrial Production and US Retail Sales. Later, Central Bank events will dominate with the Fed, BoJ and BoE coming up on Wednesday and Thursday.  All central banks are expected to keep rates and stimulus on hold. We could see a slight rebound in today’s price action following the sell-offs on Friday and in Asia this morning, but remain on the cautious side.

Have a nice day

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