Good morning.
Referendum Watch – tally of polls continue to lean toward Leave
Two opinion polls this weekend, YouGov for ITV and TNS, favoured exiting the EU in the most recent signs that the Leave campaign has picked up significant momentum in the past few weeks and the possibility of Britain leaving the EU is a far more tangible prospect than it was a fortnight ago. Sterling has been guided lower by this, falling below 1.44 against the US dollar and below 1.27 against the euro. With just over two weeks to go, voting for the status quo is beginning to look less and less likely.
Unsurprisingly, the Prime Minister has fought back for the Remain camp, releasing a cross-party letter with some significant signatories accusing the Leave campaign of playing fast and loose with the figures and pulling an “economic con-trick” on the UK public. The effectiveness of this argument has been pretty poor in the past, and is likely to be the case again today.
US jobs growth crumbles to the lowest reading in over half a decade
Friday’s Nonfarm Payrolls reading has shown just how fickle market expectations of the Fed’s actions really are. After judging June as a ‘live’ meeting at which higher rates could be forthcoming, the market is now pricing in just a 4% chance of a change after seeing odds over twice as high just a week or two ago.
The data showed that just 38,000 jobs were added in May, a significant miss on the 155,000 analyst consensus. After the dismal report, a number of Federal Reserve representatives highlighted the positives of waiting for further stabilisation and strength of US economic data before proceeding with their tightening cycle. As June’s chances of a Fed hike fall further, July’s chances have dwindled also, with markets seeing the likelihood of higher rates at just 31%.
Exciting week down under
Antipodean central banks may take some of the limelight this week, with the Reserve Bank of Australia expected to hold rates on Tuesday after cutting them to an all-time low in May, followed by the Reserve Bank of New Zealand on Wednesday who are also expected to stand pat – despite domestic inflation hovering close to 0%. Markets see a one-in-three chance of lower rates in New Zealand on Wednesday with an even higher chance of a cut in August if Wednesday’s doesn’t materialise.
Have a great day.