Article / 14 June 2016 at 7:00 GMT

Morning Markets: Risk-off market crowds the yen

Editor / Saxo Bank

Morning Markets: Prices


  • UK: Consumer Price Index (0830 GMT) 
  • Eurozone: Industrial Production (0900 GMT)
  • US: Retail Sales (1230 GMT)

Ongoing speculation that the UK might vote to leave the European Union, fuelled by new, 'Leave'-favouring polls, has caused a global outbreak of risk-off sentiment whose most immediate and obvious beneficiary is the Japenese yen.

The JPY closed last Friday at just shy of 107.00 versus the US dollar, but Monday's trade saw USDJPY gap lower to 106.72 before tumbling all the way down through the 105.00 handle. Today's trade has done nothing to stem the bleeding in this pair, with USDJPY continuing south towards 105.75.

The yen's fortunes, of course, are the Nikkei's fury and Japan's benchmark index quickly shed 200 points following the opening bell and now trades 1% below yesterday's close. The same pattern of red ink, it hardly needs to be said, is plainly visible over Britain's benchmark FTSE index which lost over 1% of its value yesterday and appears primed to head lower still today.

Market signals

Asian session

  • Brexit uncertainty has turned global and is now even weighing on sentiment in Asia
  • The Nikkei 225 headed lower by 1%, adding to Monday's sharp fall
  • S&P/ASX200 loses 2.06% in startling rout
  • Yields on sovereign debt in Australia, Japan and New Zealand sank to records
  • NAB index of business conditions steady in May, but business confidence fell two points
  • Hang Seng drops 46 points, Shanghai goes green on late rally
  • West Texas Intermediate crude dropped 1.1% to $48.34/barrel
  • Gold declined 0.3%, snapping a four-day rally which has seen it rise 3%

Forex ahead

  • EURUSD faily to break through resistance at 1.13, heads lower
  • Sterling rejects Monday rally, heads down towards 1.4150
  • USDJPY heading lower as the yen gains risk-off strength
  • AUD heads higher to trade around the 0.74 handle
  • Oil price declines take CAD down to the line at 1.28 versus the USD

From the Floor

Yen strength.Intervention is almost a certainty if we have a Brexit on June 24”, says Hardy

A fair cop.We have a near record short in the copper market – it could be a recovery candidate”, says Hansen.

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

1... 2... 3

A soft retail figure coming so soon after shockingly weak nonfarm payrolls release will prompt fresh fears that the US still struggling in the second quarter. says James Picerno

VIX up on risk
Volatility is the only certainty this week, writes the Saxo APAC Sales Trading team, and the sentiment is definitely risk-off. 

Twitter a target?

Following in the wake of Microsoft's decision to but LinkedIn, Google is likely to acquire Twitter by the end of this year says Saxo Bank equities head Peter Garnry.

Red curtains

The French Socialist Party is struggling under the weight of a moribund economy and may appoint a new leader before next year's elections writes Stephen Pope.

 In this globalised and interconnected era, UK opinion polls on Brexit have the power to drive the already lofty yen even higher, and hurt equity investor sentiment in Japan. Photo: iStock

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