Risk aversion carried over from Wall Street trade and into Asian hours. The sentiment-linked Australian, Canadian and New Zealand Dollars followed share prices lower. The anti-risk Japanese Yen and US Dollar outperformed. Tellingly, the British Pound proved weakest on the session, hinting that Brexit-related fears are pushing their way back to the forefront.

Market sentiment improved in the week following the initial post-referendum swoon after dramatic risk aversion triggered by the outcome didn’t immediately metastasize (akin to the 2008 failure of Lehman Brothers). The latest jitters seem to focus on Brexit’s growth implications for near-term economic growth. These appear to follow from comments by BOE Governor Mark Carney, who yesterday warned of “material slowing” in the UK.

Looking ahead, June’s Eurozone Retail PMI surveys headline a broadly quiet data docket in European trading hours. News-flow from the single currency area has increasingly improved relative to forecasts in recent weeks, rosy results may not offer lasting encouragement. Most of last month’s survey data was likely conducted before the UK EU membership referendum on June 23, meaning it understates the outcome’s impact on business activity. As such, investors may mostly overlook it.

The US Non-manufacturing ISM report comes into the spotlight later in the day. Expectations suggest the headline index will edge higher to 53.3, meaning service-sector activity growth accelerated in June after slumping to a two-year low in the prior month. A relative improvement in realized data outcomes compared with median estimates opens the door for a surprise on the upside.

While an improvement will almost certainly do little to revive near-term Fed rate hike bets, it may calm global slowdown fears to some extent. It will be curious to see how this reflected in the greenback, which has haven demand to thank for recent gains. That may offer clues about price action when the typically more impactful US Employment report is released on Friday.

Asia Session

European Session

Critical Levels