Sterling hit its highest level in seven weeks against the dollar early on Tuesday, touching $1.4744. With just two days left until the UK referendum vote on EU membership, there is increasing focus on the pound and the Brexit debate.
Recent polls have shown signs that the “remain” camp is gaining ground and this has improved risk appetite in the markets. Just until last week, the pound was falling as polls were showing the “leave” camp was leading.
The race is still neck and neck though as on Monday, an ORB poll for the Daily Telegraph showed “remain” at 53% versus 46% for “leave” while a YouGov Times poll had the “leave” camp at a 51% versus 49% for those favouring staying in the EU.
The overall rebound in risk sentiment has helped other risk currencies gain while safe havens eased back.
The Australian dollar rose for a third day against its US counterpart, to reach a high of $0.7488.
The Reserve Bank of Australia released its minutes today for the latest policy meeting. The markets interpreted the minutes as being hawkish and reduced their bets for a rate cut soon.
The US dollar recouped losses made against the yen from yesterday and bounced to 104.58 yen today.
The Bank of Japan also published their meeting minutes today, which showed there were continued risks to the Japanese economy and to thei
In commodities, gold briefly spiked to a session high of $1,294.09 before easing back down to 1282.25 an ounce. Brent crude retreated from a one week high of $50.65 touched on Monday, to slide to $50.06 a barrel. WTI oil slipped to a session low of $49.49 from yesterday’s high of $49.98.
The market’s focus will shift away from the Brexit debate for a while later in the day as all eyes will be on Federal Reserve Chair Janet Yellen’s testimony to the US Congress. Meanwhile, European Central Bank President Mario Draghi is also due to speak on monetary policy at the European Parliament today.
In terms of economic data today, the German ZEW economic sentiment survey will attract attention during the European session.
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