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Europe Roundup: Euro eases on geopolitical concerns, greenback gains ahead of U.S. mid-term election results, European shares tumble - Tuesday, November 6th, 2018

Market Roundup

  • Eurozone Sep 2018 producer prices mm increase to 0.5 % (forecast 0.4 %) vs previous 0.4 % (revised from 0.3 %)
     
  • Eurozone Sep 2018 producer prices yy increase to 4.5 % (forecast 4.2 %) vs previous 4.3 % (revised from 4.2 %)
     
  • Russia Nov 2018 fx intervention increase to 525.8 rub (forecast 481.5 rub) vs previous 475.7 rub
     
  • Eurozone Oct 2018 Markit composite final PMI increase to 53.1 diff.idx (forecast 52.7 diff.idx) vs previous 52.7 diff.idx
     
  • Eurozone Oct 2018 Markit services final PMI increase to 53.7 diff.idx (forecast 53.3 diff.idx) vs previous 53.3 diff.idx
     
  • Germany Oct 2018 Markit composite final PMI increase to 53.4 diff.idx (forecast 52.7 diff.idx) vs previous 52.7 diff.idx
     
  • Germany Oct 2018 Markit services PMI increase to 54.7 diff.idx (forecast 53.6 diff.idx) vs previous 53.6 diff.idx
     
  • France Oct 2018 Markit composite PMI decrease to 54.1 diff.idx (forecast 54.3 diff.idx) vs previous 54.3 diff.idx
     
  • France Oct 2018 Markit services PMI decrease to 55.3 diff.idx (forecast 55.6 diff.idx) vs previous 55.6 diff.idx
     
  • Italy Oct 2018 Markit/ADACI services PMI decrease to 49.2 diff.idx (forecast 52 diff.idx) vs previous 53.3 diff.idx
     

Economic Data Ahead

  • (0830 ET/1230 GMT) The Statistics Canada is likely to report that building permits increased 0.4 percent in September after posting similar gains in the previous month.
     
  • (1000 ET/1500 GMT) The U.S. Labor Department releases Job Openings and Labor Turnover Survey (JOLTS) report for the month of September. The report is expected to show job openings eased to 7.100 million from 7.136 million in August.
     
  • (1000 ET/1500 GMT) The Investor's Business Daily (IBD)/ TechnoMetrica Institute of Policy and Politics (TIPP) will release U.S. Economic Optimism index for the month of November. The indicator rose to 57.8 in October.
     
  • (1630 ET/2130 GMT) API reports its weekly crude oil stock.
     

Key Events Ahead

  • (0700 ET/1200 GMT) Guest speech by ECB board members Sabine Lautenschlager at Frankfurt
     
  • (1015 ET/1515 GMT) Riksbank Governor Stefan speaks in Stockholm

FX Beat

DXY: The dollar index gained, reversing some of its previous session losses, despite growing sentiment that Democrats will win the House making it difficult for Trump's agenda to get through Congress. The greenback against a basket of currencies trades 0.1 percent up at 96.40, having touched a low of 95.99 on Friday, its lowest since October 24. FxWirePro's Hourly Dollar Strength Index stood at 14.21 (Neutral) by 1000 GMT.

EUR/USD: The euro eased as Rome stated that its disputed deficit plan would not change despite Eurozone finance ministers calling on Italy to change its 2019 budget to conform with European Union rules before a deadline set for next week. The European currency traded 0.1 percent down at 1.1401, having touched a low of 1.1302 on Wednesday, its lowest since August 15. FxWirePro's Hourly Euro Strength Index stood at -6.96 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1432 (October 25 High), a break above targets 1.1476 (October 24 High). On the downside, support is seen at 1.1371 (5-DMA), a break below could drag it till 1.1302 (October 31 Low).

USD/JPY: The dollar turned lower, retreating from a 1-month peak, as investors took a cautious approach ahead of the U.S. midterm elections. The elections are likely to help the Democratic Party win control of the U.S. House of Representatives, with Republicans expected to retain their majority in the Senate. The major was trading 0.1 percent down at 113.12, having hit a high of 113.44 earlier, its highest since October 8. FxWirePro's Hourly Yen Strength Index stood at -24.17 (Neutral) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. JOLTS Job Opening data. Immediate resistance is located at 113.71 (September 28 High), a break above targets 114.10 (October 5 High). On the downside, support is seen at 112.35 (October 22 Low), a break below could take it lower 112.01 (October 17 Low).

GBP/USD: Sterling edged down after rising to a 2-week peak earlier in the day on hopes of a Brexit deal breakthrough that encouraged investors to buy the British pound. The major traded 0.1 percent down at 1.3029, having hit a high of 1.3084 earlier; it’s highest since October 22. FxWirePro's Hourly Sterling Strength Index stood at 56.42 (Bullish) 1000 GMT. Immediate resistance is located at 1.3103 (October 19 High), a break above could take it near 1.3192 (October 17 High). On the downside, support is seen at 1.2936 (October 23 Low), a break below targets 1.2867 (October 24 Low). Against the euro, the pound was trading 0.1 percent down at 87.50 pence, having hit a high of 87.25, it’s highest since October 11.

USD/CHF: The Swiss franc consolidated within narrow ranges ahead of the U.S. midterm elections. The major trades flat at 1.0043, having touched a high of 1.0094 on Wednesday, it’s highest since May 2017. FxWirePro's Hourly Swiss Franc Strength Index stood at -104.95 (Highly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 1.0100 and any break above will take the pair to next level till 1.0145. The near-term support is around 0.9954 (September 25 Low) and any close below that level will drag it till 0.9937 (September 23 Low).

Equities Recap

European shares eased, as corporate earnings missed estimates, while the greenback gained as traders braced for midterm elections in the United States.

The pan-European STOXX 600 index dropped 0.2 percent at 362.88 points, while the FTSEurofirst 300 index fell 0.3 percent to 1,425.03 points.

Britain's FTSE 100 trades 0.4 percent down at 7,078.27 points, while mid-cap FTSE 250 rose 0.2 percent to 19,099.70 points.

Germany's DAX declined 0.1 percent at 11,483.34 points; France's CAC 40 trades 0.2 percent lower at 5,089.10 points.

Commodities Recap

Crude oil prices surged, despite Washington granting sanctions exemptions to top buyers of Iranian oil. International benchmark Brent crude was trading 0.4 percent up at $72.90 per barrel by 1026 GMT, having hit a low of $72.56 on Friday, its lowest since August 21. U.S. West Texas Intermediate was trading 0.4 percent up at $62.86 a barrel, after falling as low as $62.56 on Monday, its lowest since April 9.

Gold prices rose ahead of the U.S. mid-term elections. Spot gold rose 0.3 percent up at $1,234.99 per ounce by 1034 GMT, having touched a low of $1,211.87 on Wednesday, its lowest since Oct. 11. U.S. gold futures were up 0.1 percent at $1,233.8 per ounce.

Treasuries Recap

The U.S. Treasuries traded flat during late afternoon session ahead of the country’s JOLTs job openings data for the month of September and 10-year auction, both scheduled for today at 15:00GMT and 18:00GMT respectively. The yield on the benchmark 10-year Treasuries hovered around 3.201 percent, the super-long 30-year bond yields also traded nearly flat at 3.433 percent and the yield on the short-term 2-year traded tad lower at 2.908 percent.

The German bunds remained narrowly mixed during European session after the country’s services PMI for the month of October beat market expectations. Investors will now be awaiting the 10-year auction, scheduled to be held on November 7 by 10:40GMT for further direction in the debt market. The German 10-year bond yields, which move inversely to its price, hovered around 0.422 percent, the yield on 30-year note remained flat at 1.063 percent and the yield on short-term 2-year too traded tad lower at -0.646 percent.

The Japanese government bonds traded mixed after the country’s household spending deteriorated during the month of September and investors will now be eyeing the Bank of Japan’s (BoJ) Summary of Opinions, scheduled to be released later in the week for further direction in the debt market. The yield on the benchmark 10-year JGB note, which moves inversely to its price, jumped 13 basis points to 0.131 percent, the yield on the long-term 30-year note hovered around 0.889 percent and the yield on short-term 2-year slumped nearly 13 basis points to -0.128 percent.

The Australian government bonds held gains across the curve during Asian session as investors’ preferred safe-haven buying after the Reserve Bank of Australia (RBA) left its monetary policy unchanged for the record 27th straight month despite weak inflation and falling house prices. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 1-1/2 basis points to 2.726 percent, the yield on the long-term 30-year bond also dipped 1-1/2 basis points to 3.254 percent and the yield on short-term 2-year down 1-1/2 basis points to 2.044 percent.

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December 11 08:00 UTC Released

HUCPI NSA

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1284.6 Index

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