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    Asian Session – Dollar muted after cautious Yellen; Sterling holds onto gains ahead of polling day

    Sterling was steady on the final day of the referendum campaign on what is expected to be a tight vote tomorrow when Britons go to the polls to decide whether the UK should stay in or leave the European Union. The pound edged up to 1.4673 dollars in late Asian trading today but was slightly weaker against the euro as the single currency firmed to 0.7674 pounds.

    The dollar was muted on Wednesday following another cautious outlook on the US economy by Fed Chair Janet Yellen yesterday. In her testimony before Congress, Yellen said there had been “a loss of momentum in terms of the pace of improvement”, citing the slowing jobs market and business spending as a reason for the cautious approach. She also referred to tomorrow’s UK referendum on membership of the EU, warning that it “could usher in a period of uncertainty”.

    Another central banker sounding worried about the consequences of a Brexit was ECB President Mario Draghi. Speaking before the EU Parliament’s economic committee on Tuesday, Draghi said the ECB is ready for all contingencies following the UK referendum vote.

    The euro moved higher against the dollar on Wednesday, recouping some of yesterday’s losses when it fell by 0.6%. The single currency was last up 0.3% at 1.1271 dollars. The greenback slipped away from yesterday’s highs against the yen when it briefly touched 105 yen. But it managed to hold above the 104 level in today’s Asian session and was last trading at 104.52 yen.

    Commodity-linked currencies were stronger today on higher crude oil prices. The US dollar slid to 1.2782 against the loonie, while the Australian and New Zealand dollars were trading not too far from yesterday’s peaks at 0.7481 and 0.7152 versus the greenback respectively.

    Crude oil prices were boosted from a drop in US crude stocks according to data from the American Petroleum Institute yesterday. US oil futures were up almost 1% at $50.32 a barrel in late Asian trading.

    Meanwhile, gold prices continued to ease from the increased risk appetite due to reduced Brexit concerns. Gold prices were last down 0.2% at $1265.80 an ounce.

    However, trading is expected to be cautious for the rest of the day and currencies likely to be vulnerable to fresh Brexit opinion polls coming out later today. In terms of data, Canadian retail sales and US existing home sales are the only major data on the economic calendar, while Yellen is due to testify for a second day in Congress.

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