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Europe Roundup: Gold steadies in narrow range on subdued dollar, Euro spikes to 6-week high on upbeat German Ifo data - Friday, November 24th, 2017

Market Roundup

  • Germany IFO Expectations increase to 111 (forecast 108.9) vs previous 109.1 (revised from 2.1000)
  • Germany IFO Current Conditions decrease to 124.4 (forecast 125) vs previous 124.8 (revised from -0.6000)
  • Germany IFO Business Climate increase to 117.5 (forecast 116.6) vs previous 116.7 (revised from 0.9000)
  • Italy Industrial Sales YY WDA increase TO 5.2 VS previous 3.4 (revised from 5.2)
  • Italy Industrial Sales MM SA decrease to -1.2 vs previous 2 (revised from -1.2)
  • Italy Industrial Orders YY NSA decrease to 4.5 vs previous 12.2 (revised from 4.5)
  • Italy Industrial Orders MM SA decrease to -3.9 vs previous 8.7 (revised from -3.9)
  • Switzerland Q3 Industrial Orders YY increase to 5.5 vs previous 2.8 (revised from 5.5)
  • Bank of England MPC'S Tenreyro: November rate hike was not premature
  • Bank of England MPC'S Tenreyro expects "modest" economic growth over BoE forecast horizon
  • Taiwan sees 2018 GDP +2.29 pct (previous forecast +2.27 pct)

Economic Data Ahead

  • (0945 ET/1445 GMT) U.S. Markit manufacturing flash PMI for November is scheduled for release. The expected reading is 54.8, compared with a final reading of 54.6 in October. 

Key Events Ahead

  • (U.S. markets are closed on Thursday, Nov.23, for Thanksgiving Day)

FX Beat

DXY: US Dollar index fails to hold onto gains to 93.25, slips lower to hover around 93 handle. US 10-year yields retreat from highs and uncertain US politics likely to keep pressure on the dollar.

EUR/USD: The single currency buoyed as German Ifo business morale boosted to all-time highs. EUR/USD hits 6-week highs at 1.1875 before paring some gains. The pair is facing strong resistance at 1.1880 and any minor bullishness can be seen only above that level. Any break above will take the EUR/USD to next level till 1.1900/1.1928 (50% retracement)/1.2000. It should break above 1.2090 for overall bullishness. On the lower side, near term support is around is around 1.1800 and any violation below will drag the pair to next level till 1.1755 (100-day MA)/1.1700. Short term weakness can be seen only below $1.1700.

USD/JPY: USD/JPY holds above 111 handle, hovers around weekly 20-SMA at 111.42, decisve close below for the week raises scope for more slumps. The major has been beaten down on the dovish FOMC minutes and is currently extending consolidation amid holiday-thinned trading. We find minor support at 50% Fibo at 111.02. Break below will see resumption of downside, scope then for test of 61.8% Fib at 110.15. On the flipside, retrace above 200-DMA could invalidate our bearish bias.

GBP/USD: Cable consolidates around 1.33 amid Thanksgiving lull. Markets now Focus on May's visit to Brussels where PM is expected to raise her offer to secure a Brexit deal in December. The pair is consolidating after breaking 1.3300 level. Any break above 1.3380 will take the pair to next level till 1.3400/1.3500. Short term bullish invalidation only below 1.30280. On the lower side, near term support is around 1.32300 and any break below will drag the pair to next level till 1.3175/1.3130/1.3100/1.3060/1.30270. 

EUR/JPY: EUR/JPY retraced brief dip below 100-DMA at 131.30, has broken above 5-DMA at 131.89. Upside now finds strong resistance at 20-DMA at 132.34, further upside likely on break above. Technical studies are neutral, RSI is rising but below 50 levels and -ve DMI dominance continues. Break above 20-DMA at 132.38 raises scope for re-test of 61.8% Fib retrace of 149.787 to 109.205 fall at 134.28. Break below 100-DMA will accentuate weakness, scope then for test of 23.6% Fib at 129.86 ahead of 127.56 (Aug 18 low).

AUD/USD: AUD/USD consolidating FOMC-led spike. Upside rejected shy of 20-DMA at 0.7634, break above required for further gains. Technical studies are turning slightly bullish, RSI has turned north from near oversold levels. Stochs are showing rollover from oversold levels and MACD is showing a bullish crossover on signal line. On the flipside, 5-DMA at 0.7596 is immediate support, break below to see weakness upto 0.7535 levels. Violation there could accentaute weakness.

Equities Recap

European shares set to snap two-week losing streak. The pan-European STOXX 600 index up 0.13 percent to 387.62 points, while the FTSEurofirst 300 index rose 0.26 percent to 1,525.67 points.

Britain's FTSE 100 trades 0.09 percent lower at 7,410.62 points, while mid-cap FTSE 250 down 0.06 percent at 19,994.68 points.

Germany's DAX was up 0.28 percent at 13,044.38 points; France's CAC 40 trades 0.60 percent higher at 5,411.80 points.

Commodities Recap

U.S. oil prices jumped to 2-year high on the partial closure of the Keystone pipeline. U.S. light crude hit $58.70 a barrel, before easing to $58.53 by 0952 GMT. Benchmark Brent crude was trading flat at $63.58 a barrel.

Gold steadies in narrow range as dollar remained under pressure after FOMC minutes. Spot gold was nearly unchanged at $1,291.06 per ounce, as of 0748 GMT. U.S. gold futures for December delivery dipped 0.1 percent to $1,290.70.

Palladium dipped 0.2 percent to $1,009.80 an ounce. Silver slipped 1.2 percent for the week and is poised for its first weekly decline in three. Platinum lost 1.5 percent, on track for its first weekly fall in four.

Treasuries Recap

U.S.: The U.S. markets remain closed on account of Thanksgiving Day.

UK: The UK gilts declined on the last trading day of the week amid a silent session that witnessed least data of any major economic significance, reversing all gains seen after the release of the third-quarter gross domestic product (GDP).          The yield on the benchmark 10-year gilts, jumped 2 basis points to 1.27 percent, the super-long 30-year bond yields rose 1 basis point to 1.82 percent and the yield on the short-term 2-year traded 2-1/2 basis points higher at 0.47 percent.

EUR: The German bunds slumped Friday after the country’s business climate index released by Ifo hit a new record-high during the month of November, also surpassing what markets had initially anticipated. The German 10-year bond yields, which move inversely to its price, jumped 2-1/2 basis points to at 0.37 percent, the yield on 30-year note surged 3 basis points to 1.20 percent and the yield on short-term 2-year traded flat at -0.69 percent.

NZD: New Zealand government bonds closed higher on Friday after the country’s imports hit a record high in October. Also, rising expectations that the Reserve Bank of New Zealand is set to keep interest rates at record lows for a long time to come, pushed the yields 3.5 basis points lower at the long end of the curve. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1-1/2 basis points to 2.795 percent, the yield on 20-year note also dipped 1-1/2 basis points to 3.385 percent and the yield on short-term 2-year ended 1/2 basis point lower at 1.970 percent.

JGBs: Japanese government bonds slumped on Friday after the Bank of Japan reduces the size of its bonds purchases by 10 billion yen. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, climbed 1 basis point to 0.032 percent, the yield on long-term 40-year also rose nearly 2 basis point to 0.990 percent and the yield on short-term 2-year gained 1 basis point at -0.185 percent.

AUS: Australian bonds traded a little firmer on Thursday following firmness in the U.S. Treasuries after Federal Open Market Committee toned cautious about inflation in its October 31-November 1 monetary policy meeting minutes. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.525 percent, the yield on the long-term 30-year note dipped 1 basis point to 3.265 percent and the yield on short-term 2-year fell 1 basis point to 1.777 percent.
 

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