A Eurex publication focused on European financial markets, produced by MNl

Morning Briefing July 6th 2016 Wednesday throws up a full calendar, with a whole host of central bank appearances on the schedule.

discussion at the same conference. Council member Klaas Knot participates.

The European calendar kicks off with the publication of the German manufacturing orders data at 0600GMT, followed by the release of the Spanish industrial production data at 0700GMT. At the same time, ECB President Mario Draghi speaks

Across the Atlantic, the US calendar gets underway at 1100GMT, with the publication of the latest MBA weekly applications index.

at 8th ECB Statistics Conference, in Frankfurt, while Bank of France Governor Francois Villeroy de Galhau speaks at the annual Paris EuroPlace conference,in Paris. Sweden's Riksbank will lay out their latest policy decision at 0730GMT. Also expected at 0730GMT, RBA assistant governor Guy Debelle speaks at a forex code of conduct event in Sydney. In Frankfurt, ECB Executive Board member Peter Praet and ECB Gov. Council member Yannis Stournaras participates in panel discussion at 8th ECB Statistics Conference. At 0930GMT, ECB Vice-President Vitor Constancio chairs of a panel

Politics are back to the fore in the UK, with Prime Minsiter's Questions expected at 1100GMT. However, with the ruling Conservative Party currently choosing a new leader, the session will have something like an end of term feel about it. At 1145GMT, the latest US RetailEcon-GS Store Sales data will cross the wires. ECB Executive Board member Yves Mersch chairs a panel discussion at 8th ECB Statistics Conference. BBK Board member Claudia Buch participates in the panel. The US May trade balance will be released at 1230GMT. The international trade gap is expected to widen to $40.2 billion in May after widening to $37.4 billion in April. The advance report on goods

Global Economic Trading Calendar

trade already released for the month indicated a widening, with exports down slightly and imports up sharply. Because revisions to the goods deficit have been small between the advance and final readings and the services surplus is usually little changed, a wider overall trade gap is likely. The US Redbook Retail Sales Index will be published at 1345GMT, with the US help wanted online data and the ISM June Non-Manufacturing Index expected at 1400GMT. The ISM non-manufacturing index is expected to post a reading of 53.4 in June, arise from 52.9 in May. The flash Markit services estimate was unchanged in June at 51.3. Back in Frankfurt, ECB Supervisory Board Chair Daniele Nouy speech at 8th ECB Statistics Conference from 1530GMT. The main event of the afternoon session comes at 1800GMT, with the publicationof the latest FOMC meeting minutes.

Markets JGBS: Japanese yields again dropping to record lows in the back end as more bonds world-wide move into negative yield territory with fresh concerns in Italian lenders and UK real-estate funds translating into yen strength. 10yr futures however are still slightly short of the highs set two sessions ago at 153.56, sitting up 15bps at 153.46. With no domestic data today, all eyes will be on the currency and the Nikkei. JAPAN STOCKS: Japanese stocks have opened markedly lower on yen strength. The Nikkei 225 has opened at 15434.46, down -234.87 bps, or 1.50%, while the Topix has opened at 1237.33, down -19.31 bps, or 1.54%. Currently the Nikkei 225 is trading -1.6%. FOREX: Risk-aversion was the main theme in the Asia-Pacific region as Brexit woes sent the pound tumbling and dragged other risk pairs lower. Cable imploded through the psychological support level of $1.3000 and was at one stage in almost freefall, dropping to a new 31 year low of $1.2798 before recovering to around 1.2905 and was last at $1.2885. Dollar-yen eased lower from Y101.77 to Y100.58 on safe haven flows before stabilising near to Y100.90. Aussie-dollar was sold from $0.7465 to $0.7408, with traders noting large Aussie-yen supply going through and was last at $0.7422. Meanwhile, weighed down on large euro-yen supply, euro-dollar dropped from 1.1076 to 1.1036 and was last at $1.1050 US TSYS: US Treasuries have had a strong opening as the futures drive back towards the highs from

Tuesday. Fears for the European banking sector is driving the move via the currency with USD/JPY getting caught up in the GBP/JPY selling crossfire, with 10yr futures sitting within a few ticks of the 13331+ top from yesterday. The yield on the 10yr will be watching the 2012 all-time low at 1.355%, closing Tuesday at 1.375%. With the Nikkei about to reopen, the 133-31+ level is definitely at risk, and to be kept in mind is yesterday's pre-Nikkei open selling in USD/JPY, a move that's been seen several times in recent weeks US INDEX FUTURES: E-mini S&P futures are trading on their lows, down -0.7% as the Asian timezone is feeling the heat from the FX markets. USD/JPY only briefly visited this level as the Brexit vote unwound, but bounced very hard in the aftermath. This move has been a sustained one, despite reports of illiquidity in patches. The 33.8% Fibonacci retracement of the e-mini bounce from the 1981.50 low to the top 2104.75 comes in around 2057.50. It was last at 2068.75, down -14.00 on the day. GOLD: Spot gold last up $11.46 at $1367.45 per ounce, in a $1354.34 to $1371.40 range so far this morning in Asia, busting through the post-Brexit high with ease and having a look at the March 2014 highs. Clearly a safe haven bid after Standard Life Investments suspended trading and redemptions in its 2.9 billion-pound ($3.9 billion) U.K. Real Estate fund yesterday, with M&G Investments and Aviva Investors following suit overnight. Italian banks also in the spotlight as

their third-largest lender, Monte Paschi, is said to be seeking an EU bailout. OIL: WTI crude oil futures for Aug'16 delivery last down $0.33 at $46.27 per barrel, after a $46.15 to $46.90 range in Asia today, as Asian markets are buffeted by a rapidly strengthening yen. With equity markets losing ground and safe havens being sought, the fact that analysts are looking for a fall in the weekly inventory data has been overshadowed by world banking concerns. The post-Brexit low of $45.83 will be the next test. AUSSIE BONDS: Curve making new lows again at 42.5 offered as world markets get roiled by currency concerns, driving equities lower and bonds higher, with the back end receiving better haven buying and the 3yr still stuck without RBA support as yet. Solid buying also across the bill strip with still plenty of room before reaching the post-Brexit highs. Aug'16 Interbanks also up 2bps after seeing selling yesterday after the RBA Statement, despite the fact that the RBA moved to a slightly more dovish stance. Aug'16 now pricing a 64.15 probability of a rate cut.

Technical Analysis BUND: (U16) Immediate Focus On 168.86 *RES 4: 171.58 Weekly Bull channel top 2 *RES 3: 169.04 Weekly Bull channel top 1 *RES 2: 168.86 2016 & Record High June 24 *RES 1: 167.99 High July 5 *PREVIOUS CLOSE: 167.90 *SUP 1: 166.72 Low July 4 *SUP 2: 165.51 Low June 30 *SUP 3: 165.45 21-DMA *SUP 4: 165.29 High June 17 now support *COMMENTARY: The recovery from last week's low continues with the close above 167.33 adding support to the bullish case for a test of 168.86. Bears continue to look for a close below 166.72 to ease bullish pressure and shift immediate focus back to 165.29-51 where the 21-DMA is located. The Bollinger band tops (daily and weekly) remain the key concern for bulls with potential to limit follow through but while 166.72 supports bulls remain firmly in control.

EUROSTOXX: 21-DMA Failures Prompt Sell-Off *RES 4: 2972.65 100-DMA *RES 3: 2933.33 Low June 21 now resistance *RES 2: 2895.20 High July 1 *RES 1: 2882.08 21-DMA *PREVIOUS CLOSE: 2812.88 *SUP 1: 2793.15 High June 27 now support *SUP 2: 2760.37 Low June 29 *SUP 3: 2672.73 2016 Low Feb 11 *SUP 4: 2645.44 Low July 17 2013 *COMMENTARY: Recent hesitation around the 21-DMA was previously identified as a concern for bulls with the sell-off and relatively bearish close Tuesday confirming this. Pressure has returned to the 2793.15 support with bears needing a close below to confirm focus on a retest of 2016 lows. Bulls now look for a close above 2895.20 to confirm a break of the 21-DMA, easing bearish pressure and above the 100-DMA to target 3057.713097.96.

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