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Europe Roundup: Euro trades slightly higher after various economic data sets, European markets in red, gold slips below $1,300 mark - Friday, June 15, 2018

Market Roundup

  • EUR/USD 0.12%, USD/JPY -0.08%, GBP/USD 0.07%, EUR/GBP -0.01%.
     
  • DXY 0.14%, DAX -0.24%, FTSE -0.73%, Brent -1.25%, Gold -0.28%.
     
  • Euro zone HICP Final YY, 1.9%, 1.9% forecast, 1.9% previous.
     
  • Euro zone HICP ex F&E YY, 1.3%, 1.3% forecast; 1.3% previous.
     
  • Euro zone Labour Costs YY, 2%, 1.5% previous.
     
  • Germany Wholesale Price Index YY, 2.9%, 1.4% previous.
     
  • Italy CPI (EU Norm) Final YY, 1%, 1.1% forecast; 1.1% previous.
     
  • Italy Industrial Orders YY NSA, 6.4%, 2.6% previous.
     
  • Italy Industrial Sales YY WDA, 4%, 3.6% previous.
     
  • Italy Consumer Prices Final YY, 1%, 1.1% forecast; 1.1% previous.
     
  • Japan's central bank cuts inflation view, narrowing stimulus-exit path.
     
  • China promises fast response as Trump readies tariffs.
     
  • Bundesbank slashes Germany growth view, says horizon clouded.
     
  • Gold slips on stronger dollar; U.S. - China trade war fears loom
     
  • Oil falls as focus moves to prospect of higher supply.

Economic Data Ahead

  • (0830 ET/1230 GMT) US NY Fed Manufacturing, 19% forecast, 20.1 previous.
     
  • (0830 ET/1230 GMT) Canada Manufacturing Sales MM, 0.6% forecast, 1.4% previous.
     
  • (0830 ET/1230 GMT) Canada Securities Cdns C$, -1.90 bln.
     
  • (0915 ET/1315 GMT) US Industrial Production MM, 0.2% forecast, 0.7% previous.
     
  • (0915 ET/1315 GMT) US Capacity Utlization MM, 78.1% forecast, 78% previous.
     
  • (1000 ET/1400 GMT) US University of Michigan Sentiment Prelim, 98.5 forecast, 98 previous.
     
  • (1030 ET/1430 GMT) US ECRI Weekly Index, 148.7 previous.
     
  • (1030 ET/1430 GMT) US ECRI Weekly Annualized, 2.6% previous.

Key Events Ahead

  • (1330 ET/1730 GMT) Fed's Kaplan speaks in Texas.

FX Recap

USD: The dollar index, which measures the greenback against a basket of six major currencies, rose 0.3 percent to 95.079. It hit its highest in over seven months earlier in the session.

EUR/USD: The euro was stabilized on Friday, trading up 0.1 percent against a broadly strong dollar at $1.1588. The euro on Thursday was headed for its biggest weekly loss in 19 months after the ECB unexpectedly said it would keep interest rates at record lows well into next year. Intraday bias remains neutral till the time pair holds key support at 1.1510 marks. A consistent close below $1.1510 will drag the parity down towards key supports around $1.1312 and $1.0911 levels respectively. Alternatively, reversal from key support will take the parity higher towards key resistances around $1.2084 and $1.2538 marks respectively.

USD/JPY: The Japanese yen remains almost flat against U.S. dollar after the Bank of Japan (BoJ) held its benchmark interest rate steady at its momentary policy meeting concluded early today, with the 10-year yield target maintained at around zero percent. It made intraday high at 110.90 and low at 110.38 levels. A sustained close above 110.62 is required to take the parity higher towards key resistances around 112.96 and 114.78 marks respectively. Alternatively, a daily close below 110.62 will drag the parity down towards key supports around 109.28, 108.11, 107.55 and 105.70 marks respectively.

GBP/USD: The sterling trades marginally higher on Friday above its lowest level since November, after strong U.S. retail sales and a more hawkish Federal Reserve earlier this week boosted the dollar and underlined policy divergence between the countries. Against the euro, the pound fell back after a rally on Thursday when the ECB said it would keep interest rates unchanged through the summer of 2019, sending the euro hurtling lower. The pound traded flat at $1.3280, not far from the seven-month lows of $1.3205 it reached late last month. Against the euro, sterling dropped 0.2 percent to 87.41 pence but remained above the 88-pence range it had traded at before the euro's selloff on Thursday.

USD/CHF: The Swiss franc falls noticeably against U.S. dollar and hits fresh 3-week low at 0.9988 marks. Pair made intraday high at 0.9988 and low at 0.9954 marks. Intraday bias remains bullish till the time pair holds key support at 0.9825 marks.  A sustained close above 0.9970 will take the parity higher towards key resistances around 1.0020 and 1.0062 marks respectively. On the other side key support levels were seen at 0.9788/0.9520/0.9480 marks respectively.

 Equities Recap

EUROSTOXX 50 future was up 0.14 pct.

Germany’s DAX future was up 0.27 pct.

France’s CAC 40 future was up 0.24 pct.

Britain's FTSE 100 down 0.08 pct.

Italy’s FTMIB was up 0.08 percent at 22,504.45 points in early deals.

Portugal’s PSI20 was down 0.68 percent at 5,639.06 points.

Commodities Recap

Oil prices steadied on Friday ahead of an OPEC meeting in Vienna next week as two of the world's biggest producers, Saudi Arabia and Russia, indicated they were prepared to increase output. Benchmark Brent crude oil was down 20 cents at $75.74 a barrel by 0750 GMT, after falling 80 cents on Thursday. U.S. light crude was 10 cents lower at $66.79. Both contracts hit 3-1/2 year highs in May, but have since drifted lower as U.S. crude production has risen and as the Organization of the Petroleum Exporting Countries, Russia and other allies look poised to increase output in their meeting in the Austrian capital on June 22-23.

Gold prices slipped on Friday from a one-month high hit in the previous session as investors booked profits and the dollar strengthened, while worries over U.S.-China trade dispute capped losses. Spot gold fell 0.3 percent to $1,298.25 per ounce at 0704 GMT, after reaching its highest since May 15 at $1,309.30 an ounce on Thursday. U.S. gold futures for August delivery were down 0.5 percent at $1,301.50 per ounce.

Treasuries Recap

The U.S. Treasuries surged Friday as investors poured into safe-haven assets, tracking trade turmoil with China and the imposition of tariffs. Also, the ECB’s surprise announcement of unwinding the asset purchase programme by end of this December, in its monetary policy meeting held late yesterday. The yield on the benchmark 10-year Treasuries slumped 2-1/2 basis points to 2.92 percent, the super-long 30-year bond yields plunged 2 basis points to 3.04 percent and the yield on the short-term 2-year traded 1-1/2 basis points lower at 2.56 percent.

The German bunds jumped during European session Friday after the Eurozone’s May consumer price inflation (CPI) data met market expectations. It came in at 1.9 percent y/y, meeting consensus estimates and unchanged from that in April. On an m/m basis, it registered 0.5 percent, matching estimates and up from prior 0.3 percent. The German 10-year bond yields, which move inversely to its price, slumped 4-1/2 basis points to 0.38 percent, the yield on 30-year note plunged 3 basis points to 1.13 percent and the yield on short-term 2-year traded nearly 3 basis points lower at -0.67 percent.

New Zealand bonds closed Friday’s trading session on a higher note, tracking similar movement in the United States counterpart in the overnight session after the European Central Bank (ECB) announced in its monetary policy meeting, to keep benchmark interest rates on hold at least until mid-2019, sounding dovish in its statement. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slumped 5 basis points to 2.94 percent, the yield on the long-term rose 1/2 basis point to 3.33 percent and the yield on short-term 2-year too closed 1/2 basis point lower at 1.91 percent.

Japanese government bonds remained narrowly mixed on the last trading day of the week after the Bank of Japan (BoJ) held its benchmark interest rate steady at its momentary policy meeting concluded early today, with the 10-year yield target maintained at around zero percent. The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained tad lower at 0.03 percent, the yield on the long-term 30-year note slid nearly 1 basis point to 0.71 percent and the yield on short-term 2-year steadied at -0.13 percent.

Australian government bonds gained on last trading day of the week Friday after the Federal Reserve hints at faster rate hikes, while concerns about a US-China trade war also hurt sentiment. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 2 basis points to 2.699 percent (2-week low), the yield on the long-term 30-year Note dipped 4 basis points to 3.199 percent and the yield on short-term 2-year down 1 basis point to 2.024 percent.

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