Capital continues to flow out of risk markets back into defensive havens on a combination of seasonality, central bank comments and positioning for a potential Brexit. Gold is up 1.5% today clearing $1,300/oz while JPY has broken out to new 2016 highs against USD and GBP. The big spike in JPY sent the Nikkei down 3.0% and the Hang Seng down 2.0%. Declines in Europe and North America have been more moderate with the FTSE, CAC and DAX falling 0.4%-0.6% while US index futures for the Dow and S&P are trading down 0.3%. The latest wave of defensive flows was triggered by a series of central bank comments overnight. Yesterday afternoon, the Fed statement and projections were neutral to dovish with a cut to GDP estimates, no hawkish dissenters and the dot plot split between 1 and 2 hikes this year suggesting that we may not see a rate hike in July although it’s really up to the July 8 nonfarm payrolls report. The Bank of Japan, meanwhile, held steady on interest rates and QE with no indications of any new stimulus on the way. With the US leaning neutral to dovish and the Bank of Japan leaning not as dovish as many had hoped, JPY has soared while USD has dropped back, igniting the gold rally. The Bank of England and Swiss National Bank also held monetary policy steady. Central banks are all acting like deer caught in the headlights at the moment, not wanting to make a move that they may have to potentially reverse a week from now depending on the results of the UK Brexit referendum. In its minutes the Bank of England reiterated its warnings that Brexit could impact the outlook for GDP, inflation and GBP. The British public, meanwhile, continues to reject the Chorus of Brexit Doom. Two polls issued this morning confirm the Leave side’s lead is growing, while a spectacular 6.0% surge in retail sales over a year ago indicates the growing prospects of a Brexit are boosting the UK economy not dragging it down. There’s no sense of panic in the markets about more news favouring the Leave side either with GBPUSD still holding above $1.4100 and GBP steady against EUR as well. This indicates that the prospects for a Leave win or a close vote have been priced into Sterling already. Crude oil, on the other hand, is breaking down again today with WTI and Brent falling 1.5% as a trading correction gets underway in earnest. Falling oil is weighing heavily on oil sensitive currencies as well, particularly CAD and NOK. Bank of Canada Governor Poloz confirmed in a speech that he expects Canada to post flat to slightly negative GDP growth in Q2 due to a 1.00-1.25% hit to GDP from the Alberta wildfires and Fort McMurray evacuation. He also expects the economy to post a strong recovery in Q3 as oil sands production restarts and reconstruction begins. Corporate News There have been no major corporate announcements in North America so far today. Economic News Significant announcements released overnight include: US FOMC decision 0.50% no change as expected Japan BOJ decision no changes interest rates or QQE as expected UK BoE decision 0.50% and £375B no change as expected Swiss SNB decision no changes as expected FOMC member 2016 projections GDP cut to 2.0% from 2.2% unemployment rate steady at 4.7% PCE inflation raised to 1.4% from 1.2% PCE core inflation raised to 1.7% from 1.6% Dot Plot 0.50-0.75% (1 hike) 6 0.75%-1.00% (2 hikes) 9 More than 1.00% (3-4 hikes) 2 UK retail sales 6.0% wow! vs street 3.9% UK retail ex auto 5.7% vs street 3.8% NZ GDP 2.8% vs street 2.6% vs previous 2.3% Australia employment change 18K vs street 15K vs previous 11K Australia full-time 0K vs previous (9K) Australia part-time 18K vs previous 20K Australia unemployment rate 5.7% as expected Upcoming significant economic announcements include: (Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore) There are no major announcements scheduled for North America today 8:30 am EDT US consumer prices street 1.1% 8:30 am EDT US core CPI street 2.2% 8:30 am EDT US real average weekly earnings previous 1.3% 8:30 am EDT US Philadelphia Fed street 1.0 vs previous (1.8)