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    A calm day with interesting market moves

    Sterling was undoubtedly one of the most interesting currency. The British pound has dropped to the lowest in two months versus the US dollar as uncertainty about a potential UK leave from the European Union rises.  Polls published over the weekend showed that eurosceptics are leading by more than 10 percent points 10 days ahead of referendum.

    Hedge fund managers and other speculators nearly doubled their net short positions on the British currency to the most since 2013. On the other hand, bullish bets on yen and gold have increased as safe-haven assets. There was a lot of anxiety and uncertainty around ICM poll which was supposed to be released in the morning but pollster ICM’s website had crashed under the weight of interest in the promised new survey. According to Bloomberg, two ICM polls for The Guardian - one telephone, the other conducted online - put Leave on 53%, six points ahead of Remain on 47%, if ’don’t knows’ are excluded.

    With higher risk aversion it’s not a surprise that gold prices are rising today. After strong drop in the second half of May the precious metal has erased almost all of its losses. On Monday, we observe that gold is moving towards 1290 USD per oz. The breaking above that level may pave the way for this year highs at 1300 USD per ounce. The risk aversion also caused a drop on stocks, S&P500 is currently trading lower (-0.6%). All major stock markets ended in the negative territory. Crude is also trading lower, we had the latest OPEC report, majority of estimates had been kept unchanged.

    China’s industrial production rose faster than expected in May, while retail sales and urban investment slowed unexpectedly, raising doubts about whether the world’s second largest economy is stabilizing after a disappointing first quarter.Retail sales rose 10% in May from a year earlier. That followed a 10.1% advance in April and median estimates calling for the same. Industrial output  rose 6% from a year earlier following a similar advance in April.  The data highlight the difficult choice facing government officials: increase monetary stimulus and rely on traditional investment-led growth, or let the country’s highly inefficient industrial sector cool further while reducing overcapacity. 

    The week has just started, key events are described here.

    Any person acting on this information does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.

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