Talking Points:

British Pound drops after London Mayor Boris Johnson backs “Brexit”
Yen declines, Aussie and Kiwi Dollars rise as risk appetite firms in Asia
Soft Eurozone PMI data may punish Euro, amplify rebound in sentiment

The British Pound slumped at the start of the trading week after London Mayor Boris Johnson said he would campaign for the UK to leave the EU ahead of a referendum on membership in the regional bloc set for June 23. A recent poll showed Johnson is second only to Prime Minister David Cameron in influencing likely voters.

The threat of political instability in the UK did not spill over into broader risk aversion however. In fact, sentiment firmed across Asian bourses, with the Australian and New Zealand Dollars following shares upward while the anti-risk Japanese Yen declined.

Looking ahead, S&P 500 futures are pointing firmly higher to hint that the risk-on mood is set to continue. The preliminary set of February’s Eurozone PMI figures headlines the data docket. The region-wide composite gauge is expected to show a slowdown in manufacturing- and service-sector growth.

News-flow from the common currency area has increasingly underperformed relative to consensus forecasts over recent weeks. This opens the door for a downside surprise, which may amplify speculation on an expansion of ECB stimulus measures to be announced after next month’s policy meeting.

The prospect of a larger-scale easing effort is likely to weigh on the Euro. An increase in global monetary accommodation may also reinforce the recovery in sentiment, compounding pressure on the Yen while offering added support to commodity-bloc FX.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

22:10

AUD

RBA’s Debelle Speech in Sydney

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