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    JPY strengthens, USD broadly lower amid Yellen’s comments

    Market Brief

    G10 Advancers and Decliners vs USD
    NZD 0.31
    JPY 0.25
    GBP 0.25
    CAD 0.24
    AUD 0.24
    DKK 0.19
    EUR 0.19
    NOK 0.17
    SEK 0.14
    CHF 0.05
    Global Indexes Current Level % Change
    Nikkei 225 Index 16065.72 -0.64
    Hang Seng Index 20787.87 0.58
    Shanghai Index 2889.422 0.38
    FTSE futures 6199.5 0.1
    DAX futures 10075.5 0.46
    SMI Futures 7941 0.3
    S&P future 2078 -0.12
    Global Indexes Current Level % Change
    Gold 1264.16 -0.31
    Silver 17.22 -0.39
    VIX 18.48 0.6
    Crude wti 50.27 0.84
    USD Index 93.97 -0.05

    Yesterday’s relief rally was short-lived as we now find ourselves on the home stretch of the Brexit decision. The risk-on sentiment prevailed during the first two days of the week, boosting the pound sterling and the euro. Starting on Tuesday afternoon, the glass was half empty, reversing gains in the pound and the euro and boosting the Japanese yen and the Swiss franc.

    The pound sterling fell as much as 1.10% against the greenback before consolidating at around 1.4680 in Tokyo. The cable has been unable to break the 1.4770 resistance (high from May 3rd) as the Brexit vote looms. We expect the pair to be prone to wild swings as liquidity dries up, as we get closer to the vote.

    EUR/USD also had a tough US session with Yellen testifying before the Senate Banking Committee. Nothing new was said as Yellen’s remarks roughly repeated what was said during the June FOMC meeting, namely that the Fed will take more time to deliver another rate hike, waiting for the US economy to strengthen further. The euro fell almost 1% and slid as low as 1.1242 in Tokyo before consolidating at around 1.1263.

    The New Zealand dollar was the best performing currency, benefiting from the recovery in crude oil prices and the increasing likelihood, according to the latest polls, that the United Kingdom will remain within the European Union. NZD/USD hit 0.7148, up 0.31% on the session.

    After falling 1.40% on Tuesday, the Japanese yen strengthened again. USD/JPY weakened 0.25% in Tokyo and returned to 104.36. Over the last few weeks, the pair has been stabilising between 103.50 and 105 as Brexit polls showed contradictory results. The pair will most likely continue to trade range bound until the result of the Brexit vote becomes clear.

    Gold continued to move lower as investors anticipate a downside correction in the event of a “no” vote on Thursday. XAU/USD reached 1,261.77 in Asia, down more than 4% over the last six days. Overnight, the yellow metal slid 0.31%, while silver fell 0.39%.

    This morning, the equity market was broadly trading in positive territory, with the exception of Japanese shares, which reversed previous gains. The Nikkei and Topix indices fell 0.64% and 0.72% respectively. In mainland China, the CSI 300 rose 0.50%, while offshore the Hang Seng surged 0.58% and the Taiex edged up 0.36%. In Europe, equity futures are pointing to a higher open.


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