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Europe Roundup: Euro hits 3-week high ahead of first round of French election, dollar slumps on geopolitical concerns, investors await BoE Carney’s speech - Thursday, April 20th, 2017 

Market Roundup

  • EUR/USD +0.5%, USD/JPY +0.15%, GBP/USD +0.5%, EUR/JPY +0.7%
     
  • DXY -0.35%, DAX +0.2%, FTSE -0.1, Copper +1.75%, Gold flat
     
  • EUR/USD rises to its highest since end of March at 1.0778
  • Dollar index falls to 3-week low of 99.393
     
  • Gold steadies, supported by weaker dollar, geopolitical concerns
     
  • German Mar PPI 0.0% m/m, 3.1% y/y vs previous 0.2%/3.1%. 0.1%/3.2% forecast
     
  • May to make election pledge to end EU free movement of people into UK - Daily Mail
     
  • Undoing bank regulation is risk to stability, U.S. stance key - Bank of France
     
  • Japan government raises business sentiment assessment, first time in 4 months
     
  • POLL-Euro zone growth steady but modest - if political status quo remains

Economic Data Ahead

  • (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 8,000 to a seasonally adjusted 242,000 for the week ended Apr. 14 while continuing claims for the week ended Apr. 7 is expected to decline to 2.020 m from 2.028 m.
     
  • (0830 ET/1230 GMT) Philadelphia Federal Reserve manufacturing survey is likely to show that business activity decreased to 25.0 in April from 32.8 in March.
     
  • (1000 ET/1400 GMT) The Conference Board is likely to report that U.S. leading economic index rose 0.2 percent in the month of March.
     
  • (1000 ET/1400 GMT) The European Commission releases Eurozone's preliminary Consumer Confidence reading for the month of April. The index posted a final reading of -5.0 in the prior month.
     
  • (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending April 14.

Key Events Ahead

  • (1130 ET/1530 GMT) Bank of England Governor Mark Carney speaks at Washington, DC IIF event.
     
  • (1245 ET/1645 GMT) FedTrade operation 30-yr Fannie Mae/Freddie Mac (max $1.450 bn)
     
  • (1315 ET/1715 GMT) United States TreasurySecretary Steven Terner Mnuchin, et al in conversation at IIF.
     
  • (1515 ET/1915 GMT) Canada Minister of Finance William Morneau and IMF Deputy Managing Director David Lipton, UBS Chairman Axel Weber, former Reserve Bank of India governor Raghuram Rajan participate in "Global Economy on an Upswing: Can it Work for All?" panel in Washington.
     

FX Beat

DXY: The dollar fell to a 3-week low versus the euro as concerns over political risks and continued tensions over North Korea dampened risk sentiment. The greenback against a basket of currencies traded 0.2 percent down at 99.61, having hit a fresh low of 99.37, its lowest since Mar. 28. FxWirePro's Hourly Dollar Strength Index stood at 2.08 (Neutral) by 1000 GMT.

EUR/USD: The euro rose to a fresh 3-week peak amid a solid rebound staged by the German bund yields. Markets now anxiously await this weekend's first round of presidential voting in France. The European currency traded 0.4 percent up at 1.0758, hovering towards a high of 1.0777 earlier in the session, its highest since Mar. 29. FxWirePro's Hourly Euro Strength Index stood at 40.92 (Neutral) by 1000 GMT. The minor support for the day is around 1.0739 (hourly Kijun-Sen ) and any violation below will drag the pair down till 1.06965 (23.6% retracement of 1.0775 and 1.0594)/1.06400 (200- HMA). The near term resistance is at 61.8% fibo (1.0775) and any indicative break above will take it till 1.08288/ 1.08735/ 1.09058 (Mar 27 high).

USD/JPY: The dollar advanced, extending gains for the second consecutive session, supported by modest gains in the U.S. Treasury bond yields. However, the upside remains capped as investors refrained from placing risky bets ahead of the first round of the French presidential election over the weekend. The major traded 0.2 percent up at 109.05, having touched a low of 108.13 earlier in the week, its lowest since Nov. 15. FxWirePro's Hourly Yen Strength Index stood at -35.79 (Neutral) by 1000 GMT. On the higher side, any break above 109.50 (10- day MA) and break above will take the pair till 109.85 (daily Tenken-Sen)/110.30 (21- day EMA). The near term support is around 108 and any break below will drag it till 106.32.

GBP/USD: Sterling advanced, reversing most of its previous session losses, as upbeat sentiment following the recent announcement by UK’s PM Theresa May to call snap elections on June 8 continued to underpin the British pound. Investors’ now await BoE Governor Carney’s speech at the Institute of International Finance later in the day.  Sterling trades 0.25 percent up at 1.2807, having hit a high of 1.2901 on Tuesday, its highest since Oct. 3. FxWirePro's Hourly Sterling Strength Index stood at 103.97 (Highly Bullish) by 1000 GMT. On the lower side, near term support is around 1.2768 (23.6% retracement of 1.23650 and 1.29018) and any break below will drag the pair down till 1.2700/1.2630 (200 –day MA)/1.2490 (100- day EMA). Any break above the 1.2900 will take the pair till 1.3000. Against the euro, the pound traded 0.2 percent down at 83.95 pence, pulling away from a high of 82.99 hit on Tuesday, its strongest since July 22.

USD/CHF: The Swiss franc rallied to a fresh 3-week high as looming uncertainty over the upcoming first round of the French presidential election on Sunday supported safe-haven assets.  The major traded 0.2 percent down at 0.9961, hovering towards an early high of 0.9940, its weakest since Mar. 29. FxWirePro's Hourly Swiss Franc Strength Index stood at 16.24 (Neutral) by 1000 GMT. Any break above will take the pair till 1.03435. Overall trend reversal is only above 1.03435. The minor resistance is around 1.0600/1.01200. The near term support is around 0.9940 (200- day MA) and any break below will drag it till 0.98600/0.9800.

AUD/USD: The Australian dollar rebounded from a 1-week low touched in the previous session, after data showed Australia's business confidence improved slightly in Q1 2017. The Aussie trades 0.2 percent higher at 0.7515, having hit a low of 0.7491 on Wednesday, it’s lowest since Apr. 12. FxWirePro's Hourly Aussie Strength Index stood at -76.52 (Slightly Bearish) by 1000 GMT. On the lower side, any break below 0.7450 confirms minor weakness, a decline till 0.7380/0.7325 likely. The major resistance is around 0.7580 (55- EMA) and a break above will take the pair till 07650/0.7680/0.7745.

Equities Recap

European shares rose, bolstered by strong sales reported by consumer sector, while the euro rallied to a fresh 3-week high ahead of the first round of the French presidential election over the weekend.

The pan-European STOXX 600 index rose 0.2 percent to 377.98 points, while the FTSEurofirst 300 index advanced 0.2 percent to 1,484.19 points.

Britain's FTSE 100 trades 0.08 percent down at 7,108.70 points, while mid-cap FTSE 250 lost 0.3 percent to 19,360.71 points.

Germany's DAX rose 0.25 percent at 12,046.58 points; France's CAC 40 trades 1.01 percent higher at 5,054.18 points.

Tokyo's Nikkei fell 0.01 percent to 18,430.49 points, Australia's S&P/ASX 200 index rose 0.23 percent to 5,817.40 points. South Korea's KOSPI gained 0.50 percent to 2,149.15 points.

Shanghai composite index edged up 0.04 percent to 3,172.10 points, while CSI300 index surged 0.5 percent to 3,461.55 points. Hong Kong’s Hang Seng added 1.0 percent to 24,056.98 points.

Commodities Recap

Crude oil prices regained after falling to multi-week lows in the previous session, as Kuwait said it expected an OPEC-led effort to cut supplies would be extended beyond mid-2017. International benchmark Brent crude was trading 0.7 percent up at $53.43 per barrel by 0920 GMT, having hit a low of $52.56 the day before, its weakest since Mar. 30. U.S. West Texas Intermediate rose 0.5 percent to $51.25 a barrel, after declining as low as $50.06 on Wednesday, its lowest since Apr. 4.

Gold prices rose after falling to a 1-week low the previous day, as tensions surrounding North Korea and the upcoming French presidential election strengthened the safe-haven asset. Spot gold rebounded 0.1 percent at $1,279.74 per ounce as of 0943 GMT, having hit a low of $1273.90 per ounce on Wednesday, its lowest since Apr. 12. U.S. gold futures were down 0.2 percent at $1,281.30

Treasuries Recap

The U.S. Treasuries slumped ahead of the United States Treasury Secretary Steven Mnuchin’s speech, scheduled to be held later in the day. The yield on the benchmark 10-year Treasury jumped 2-1/2 basis points to 2.22 percent, the super-long 30-year bond yields also climbed 2-1/2 basis points to 2.88 percent and the yield on short-term 2-year note traded nearly 1-1/2 basis points higher at 1.18 percent.

The UK gilts slumped as investors wait to watch the Bank of England (BoE) Governor Mark Carney’s speech, scheduled to be held later in the day. Also, the country’s retail sales during the month of March, scheduled to be released on April 21 will provide further direction in the debt market. The yield on the benchmark 10-year gilts, jumped 2 basis points to 1.08 percent, the super-long 30-year bond yields climbed 1-1/2 basis points to 1.67 percent while the yield on the short-term 3-year traded nearly 1-1/2 basis points higher at 0.24 percent.

The German bunds slid as investors are eyeing the country’s manufacturing PMI for the month of April, scheduled to be released on April 21. However, investors have largely shrugged-off the lower-than-expected producer prices for the month of March, released earlier today. The yield on the benchmark 10-year bond, which moves inversely to its price, jumped nearly 2-1/2 basis points to 0.22 percent, the long-term 30-year bond yields also climbed over 2 basis points to 0.94 percent and the yield on short-term 2-year bond rose 1-1/2 basis points to -0.78 percent.

The New Zealand bonds slumped after reading the higher-than-expected consumer price inflation for the first quarter of this year, released earlier today. Also, the country’s inflation rose to a 5-year high, which further waned investors from safe-haven assets. The yield on the benchmark 10-year bond, jumped 3-1/2 basis points to 2.97 percent, the yield on 7-year note also surged 3-1/2 basis points to 2.68 percent and the yield on the short-term 2-year note too traded 3-1/2 basis points higher at 2.15 percent.

The Australian government bonds plunged as investors moved away from safe-haven assets amid geopolitical tensions that were offset by a more positive market reaction to the sudden announcement of the United Kingdom’s snap election, to be held on June 8. Investors are looking forward to a more flexible and fluid exit of Britain post this election. The yield on the benchmark 10-year Treasury note, jumped nearly 5 basis points to 2.51 percent, the yield on the 15-year note climbed 5-1/2 basis points to 2.92 percent and the yield on short-term 2-year traded 3 basis points higher at 1.78 percent.

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Fintech Week Chicago

April 28 06:00 UTC Released

ZAPvt Sector Credit Ext.*

Actual

4.95 %

Forecast

Previous

5.26 %

April 28 06:00 UTC Released

ZAM3 Money Supply YY*

Actual

5.62 %

Forecast

Previous

6.63 %

April 28 06:45 UTC 3636m

FRPvt Sector Credit Ext.*

Actual

Forecast

1.4 %

Previous

1.4 %

April 28 06:45 UTC 3636m

TRCPI (EU Norm) Prelim YY

Actual

Forecast

1.4 %

Previous

1.4 %

April 28 06:45 UTC 3636m

TRProducer Prices MM

Actual

Forecast

Previous

-0.2 %

April 28 06:45 UTC 3636m

FRConsumer Spending MM

Actual

Forecast

0.5 %

Previous

-0.8 %

April 28 06:45 UTC 3636m

FRProducer Prices MM

Actual

Forecast

Previous

-0.2 %

April 28 07:00 UTC 5151m

TRCPI (EU Norm) Prelim YY

Actual

Forecast

Previous

-3.69 %

April 28 07:30 UTC 8181m

TRProducer Prices MM

Actual

Forecast

Previous

8.00 %

April 28 07:30 UTC 8181m

EZInfl Fcast Curr Yr*

Actual

Forecast

Previous

8.00 %

Fintech Week Chicago
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