Sterling Jumps 2%, Naira Plunges 23%, and Rupee Falls, too

June 20, 2016

It looks like the murder of MP Jo Cox, who favored remaining in the EU, may not have been in vain.  A new poll suggests the pendulum of sentiment is swinging toward staying in the European Union, although the margin between the staying versus leaving remains too close to call.

Nigeria’s naira hit an air pocket after a 15-month peg of 198 to the dollar was ended.

Reserve Bank of India Governor Rajan said he will not serve a second term.  His current term ends September 4.

Chinese property price inflation rose to 6.9% in May from 6.2% in April, led by smaller cities.  prices accelerated in 50 of 70 surveyed cities, up from 46 in the prior month.

Former Japanese Prime Minister Sakakibara expects the yen to strengthen to 100 per dollar by year end.  But the yen slipped 0.4% overnight.  The dollar, by contrast, fell 0.7% against the Australian currency, 0.5% relative to the kiwi, 0.4% vis-a-vis the euro and loonie and 0.1% against the yuan.  The dollar edged up 0.1% overnight against the Swiss franc.

Reduced Brexit fears so far today bolstered stock markets in Europe by 7.4% in Greece, 3.5% in France and Germany, 3.1% in the U.K., 3.0% in Spain, and 2.6% in Italy.  Earlier in the Pacific Rim, Japan’s Nikkei closed up 2.3% despite news of a trade deficit of JPY 41 billion in May.  Equities also climbed 1.8% in Australia, 1.4% in South Korea, Hong Kong and Singapore and 0.9% in India but just 0.1% in China.

Among 10-year sovereign debt yields, the British gilt is up 8 basis points, and the German  bund gain 3 bps.  Futures point to a rise in the U.S. treasury, but the Japanese JGB is flat.

Gold fell back 0.9% to $1,283.1 per ounce following a strong upward run last week.  West Texas Intermediate crude oil advanced 1.7% to $48.80 per barrel.

The Japanese customs trade data revealed on-year declines of 11.3% in exports and 13.0% in imports but disparate monthly movements with a 1.3% drop in exports but a 1.0% increase in imports.

German producer prices rose 0.4% on month in May, the most this year, which trimmed the 12-month rate of decline to a 4-month low of 2.7%.

The British Rightmove house price index fell 0.8% on month in May, producing the smallest on-year advance (5.5%) since last July.

Construction output in the eurozone fell for a third straight month in April, edging down 0.2%.  The 12-month change swung into the red (down 0.4%).  Such had increased 5.2% between January 2015 and January 2016.

Consumer confidence in New Zealand fell 3.7% between the first and second quarters of 2016.  That was the seventh decline in nine quarters.

New Zealand’s Performance of Services index (PSI) slipped to a 2-month low in May of 56.9.

South Korean producer price deflation held steady in May, posting another 12-month decline of 3.1%.

Dutch consumer sentiment rose four points to a 6-month high of +5 in June.

Spain’s trade surplus narrowed 20% on month to EUR 637 million in April.

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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