European Outlook: Asian stock markets were mixed, with Japan underperforming amid Brexit jitters, with the Yen vulnerable to safe haven inflows. U.S. and U.K. stock futures are moving higher though and it seems markets are going with betting companies, which giver higher odds to a victory for the “Remain” camp than the polls. Bund and Gilt futures closed mixed yesterday, with Bunds outperforming, although the future already lost gains in after hour trade yesterday and with stock futures underpinned is likely to open lower. Today’s calendar only has Eurozone consumer confidence data, which we expect steady at -7.0 (median -7.1), leaving the focus fully on tomorrow’s vote on the U.K.

Fed’s Yellen’s Testimony: Fed Chair Yellen repeated the Fed will continue raising rates cautiously, in her prepared testimony before the Senate Banking Committee. She’s optimistic on further growth but noted there are still considerable uncertainties over the outlook. The Fed is monitoring the job market carefully to see whether the weakness in the May report was transitory, she said, and added it is important not to react to one or two reports (isn’t that what the FOMC did, however?). On the positive front, she said spending has picked up smartly while housing is recovering. But she cautioned that the Fed can’t dismiss the slow productivity growth. Brexit could have significant economic repercussions. Yellen cautioned the recent weakness in jobs is a loss of momentum, not an erosion in the labor market. She and the FOMC expect further improvement in the labor market in the coming year and look for other measures of unemployment to come down. And while the last couple of months of data were quite disappointing, it’s her hope and expectation that it is a temporary development. Other job metrics suggest improvement, including the unpublished LMCI numbers. She added though, that with the economy near full employment, job creation may naturally slow. The Fed will be monitoring the situation closely.

ECB’s Draghi’s Testimony: ECB’s Draghi leaves door open to act again saying that policy makers, “stand ready” if necessary. Draghi highlighted Brexit risks saying “in particular the ECB is ready for all contingencies following the U.K.’s EU referendum”. The Brexit risk aside, which would clearly mean all forecasts for Europe have to be rewritten, Draghi was clearly eager to keep the door to further action wide open and assure markets that the ECB hasn’t run out of tools yet, but there was no sign of the need to act again if the U.K. decides to stay.

BOJ Kuroda: “FX, stock markets sometimes move too much” this could easily be interpreted as the BOJ are preparing for intervention. Many analysts assumed USDJPY below 105.00 would trigger this move, no evidence that this is the case so far.   He also empathized that the deflationary mindset was deeply rooted in the Japanese mindset and with a note of irony also said that both fiscal and monetary policy do not always turn out as expected.

Main Macro Events Today

• Canada Retail Sales: Retail sales values are expected to rise 0.7% in April (median +0.8%) after the 1.0% drop in March. The report is due Wednesday. The ex-autos sales aggregate is seen expanding 0.6% in April (median same at +0.6%) after dipping 0.3% in March. Gasoline prices increased 8.9% in April after expanding 5.7% in March, according to the CPI . Hence we should see the gasoline station sales component exert a boost to total and ex-autos sales. But vehicle sales remained elevated though April, so we may see another positive performance from the vehicle component. The consumer has been quite resilient in so far in 2016. An as expected gain April retail sales that is accompanied by a rise in the “real” (price adjusted) sales basis would further underpin our expectation for a rebound in April GDP. We expect April GDP to rise 0.1% after the 0.2% drop in March.

•  Yellen Testimony:  Fed Chair Yellen’s Monetary Policy Report to Congress continues today as she concludes her testimony.

Janne Muta

Chief Market Analyst

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Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

FX News Today

European Outlook: Stock markets continued to move higher in Asia overnight, but outside of Japan gains were rather modest and U.K. stock futures are already heading south again, pointing to some correction in equity markets, after yesterday’s strong gains. The latest Brexit polls are pointing in different directions and will remind markets, that Thursday’s vote will be a very close call. It will also be decisive for the Eurozone outlook and today’s ZEW reading will come not only with a wider error margin, but also will be irrelevant if the U.K. votes to leave the EU. The European calendar also has U.K. public finance data and ECB’s Draghi is scheduled to speak to the European Parliament today.

Japan’s Industrial Activity picks up: Better than expected production from all sectors of the Japanese economy. PM Abe has also been speaking stressing that the government’s top priority is to completely exit deflation and grow the economy through negative interest rates. He also emphasized the need to protect low-income pensioners and raised the possibility of an extra budget once tax revenue estimate is completed. He also stated clearly that monetary policy methods were the responsibility of the BOJ and not the ministry of finance.

 Fedspeak: Minneapolis Fed’s Kashkari said capital rules may stifle lending in the U.S. in remarks to a symposium on Too Big to Fail. While he continued to agree that banking reforms and increased capital are essential in the wake of the 2008 financial crisis, if the pendulum swung to far back to regulation, that could come at the cost of lending and economic growth. That could also increase the risks taken by non-banks such as hedge funds and insurance companies.

US data reports: US Producer Sentiment Resumes Climb in June: The early-month producer sentiment measures reversed recent setbacks with June bounces, as disruptions from the May vehicle assembly rate plunge to an 11.4 mln clip are reversed. We expect the ISM-adjusted average of the major sentiment measures to rise to 50 in June from the 49 average in May that was also seen in January and February, though June sentiment still looks poised to undershoot the 53 recent-peak in March.

Main Macro Events Today

• German ZEW: ZEW Economic Sentiment comes with a wider error margin than usual, as very much will depend on when the responses came in as market sentiment swung widely over the past week, amid the changes in Brexit polls. We expect the Brexit debate to overshadow the survey that focuses on investor confidence and forecast a decline in the June headline reading to 6.0 (median 7.4) from 6.4 in May. If the U.K. votes to leave forecasts will have to be rewritten also for the Eurozone, as the fallout will clearly impact the economic outlook even if it takes at least 2 years before the U.K. can actually leave the EU.

• Yellen Testimony: Fed Chair Yellen’s Monetary Policy Report to Congress highlights in the U.S. though her comments will be anticlimactic after last week’s FOMC. We don’t expect any significant changes from the dovish tone set last week where there was surprisingly large downward revisions in the official GDP estimates for 2016, along with downward bumps across the forecast horizon, which in turn made for a much shallower path of normalization. While she’ll try to present cautiously optimistic front in her verbal sparring with Congress, she’ll have to acknowledge the downside risks manifest in the Fed’s forecasts.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.