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Europe Roundup: Mixed bag of rallies in Euro stocks after EZ CPI flashes, US stock futures ease - Friday, April 28th, 2017| 12:01 PM GMT

Market Roundup

  • EUR/USD +0.6%, USD/JPY +0.2%, GBP/USD +0.3%, EUR/GBP +0.3%
  • DXY -0.3%, DAX +013%, FTSE -0.3%, Brent +0.5%, Iron ore +4.5%
  • Euro, bond yields & stocks rise after Eurozone inflation beats forecasts
  • Eurozone April Inflation, flash 1.9% y/y versus previous 1.5%. 1.8% forecasts
  • Eurozone March Money-M3 annual growth 5.3% versus previous 4.7%. 4.7% forecasts, consequently, euro jumped Friday factoring in the core CPI news which is its highest level since 2013, The single currency was up 0.57% at $1.0935
  • DE Mar Import prices -0.5% m/m, 6.1% y/y versus previous 0.7%/7.4%. -0.1%/6.5% forecasts
  • GB Apr Nationwide house prices -0.4% m/m, +2.6% y/y versus previous -0.3%/3.5%. 0.1%/3.3% forecasts
  • GB Mar Mortgage approvals 41.061k versus previous 42.247 revised
  • GB Q1 GDP prelim +0.3% q/q, +2.1% y/y versus previous 0.7%/1.9%. 0.4%/2.2% forecasts
  • Swiss KOF indicator falls to 106.0 in April versus 107.8 forecasts. March revised to 1.07.2
  • Swiss National Bank could take negative rates deeper - Jordan
  • European Central Bank chief Mario Draghi took a cautious line at Thursday's post-policy meeting news conference, pulling the single currency back below $1.09 and encouraging talk that the bank will seek to cap any gains for the euro for fear of undermining hard-won rises in inflation.
  • Norway central bank survey shows output developing roughly as expected
  • Norway shaves 2016 government deficit to 2.6 pct of oil fund
  • Swedish central bank opposes plans for reduced FX-reserve
  • Brexit noise: Merkel warns against British illusions in Brexit talks, Italy PM says EU must remain united during Brexit negotiations
  • The US dollar has been feeble overnight after the US administration’s tax plans contained little new that was not already leaked. The Canadian dollar and Mexican peso were supported by reports that US President Trump agreed not to pull out of NAFTA “at this time”
  • Sentiment on the greenback was fragile after U.S. President Donald Trump commented he would either negotiate or terminate a horrible trade deal with South Korea

Economic Data Week Ahead

  • (0830 ET/1230 GMT) U.S. advanced GDP Q/Q seems to have slowed in the Q1; the data from the Commerce Department is expected to show on Friday. Gross domestic product is likely to have dropped to 1.3 pct from 2.1 pct in the previous quarter.
  • Canadian GDP data is due to be released on Friday; a report that is likely to display the economy grew by 0.1 pct in February. While that will mark a step down from January's strong 0.6 pct pace, analysts still expect the economy is on track for a solid first quarter.

Key Events Ahead

  • (09:30 ET - 13:30 GMT) - Real GDP (Q1) mkt +1.1% q/q AR, previous +2.1% q/q
  • (09:30 ET - 13:30 GMT) - Real Final Sales (Q1) mkt +1.3% q/q AR, previous +1.1% q/q
  • (09:30 ET - 13:30 GMT) - Core PCE Deflator (Q1) mkt +2.0% q/q AR, previous +1.3% q/q
  • (09:30 ET - 13:30 GMT) - Employment Cost Index (Q1) mkt +0.6% q/q AR, previous +0.5% q/q
  • (09:30 ET - 13:30 GMT) - Wages (Q1) previous +0.5% q/q
  • (10:45 ET - 14:45 GMT) - Chicago PMI (Apr) mkt 56.5, previous 57.7
  • (11:00 ET - 15:00 GMT) - University of Michigan Consumer Sentiment Index (April) mkt 98.0, previous 98.0
  • (11:00 ET - 15:00 GMT) - University of Michigan Current Conditions Index (April) mkt 115.0, previous 115.2
  • (11:00 ET - 15:00 GMT) - University of Michigan Expectations Index (April) mkt 87.0, previous 86.9 
  • (12:45 ET - 16:45 GMT) – Fed.Trade Operation 30-year Fannie Mae / Freddie Mac (max $1.6 bn)
  • (14:15 ET - 18:15 GMT) - Fed Governor Brainard on FinTech; Washington, DC
  • (15:30 ET - 19:30 GMT) - FRB Philadelphia's Harker on "How STEM Can Get You Anywhere"; Washington, DC

FX Beat

DXY: The dollar tumbled today from the day highs of 99.25 to the current 98.78 levels and re-approached a recent five-month trough against other major currencies on Friday, as investors eyed the release of U.S. economic reports due which is likely to be delivered shortly and amid ongoing concerns over U.S. politics.

The index is facing strong support around 98.70 and any break below confirms further weakness, a decline till 98 is possible. On the higher side, near term resistance is around 99.14 (200- day MA) and any close above will take the index till 99.59 (daily Tenken-Sen)/100.03 (Apr 21st high)/100.33 (55- EMA).

Minor trend reversal only above 100.05.

While the FxWirePro currency strength index for the dollar that measures hourly performance was almost unchanged but has been mildly bullish as the euro has shown strength earlier today after ECB’s monetary policy yesterday.

EUR/USD:  The pair rallies to 1.0947 as focus immediately reverts to ECB policy shift, and Eurozone M3 jumps to 5.3%, highest since 2009.

It has shown a huge jump after declining till 1.28516 yesterday. Euro declined from the temporary top of 1.2950 as ECB Draghi dismissed policy normalization. Dovish Draghi comments push European bond yields lower. It is currently trading around 1.08925.

On the lower side, minor weakness can be seen only below 1.08500 bottoms formed after French election will drag the pair down till 1.08200/1.07850 (61.8% retracement of 1.06822 and 1.09508)/1.0745 (21 EMA).

The near-term major resistance 1.09500 and any violation above will take the pair till 1.1000/1.1045.The minor resistance is around 1.09329 (61.8% retracement of 1.1299 and 1.03400).

USD/JPY: The pair hits the highest level for this month at 111.77 yesterday and has given up its daily gains. The pair jumped from the low of 108.13 formed before French elections. It is currently trading around 111.41

The pair has taken support near 110.89 (200- 4H EMA) and any minor weakness can be seen only below that level. Any break below 200- 4 H EMA targets 110.29 (100- 4H EMA)/110.

On the higher side, the pair needs to regain the 112 level for further jump till 113.

GBP/USD: Cable has broken the temporary top of 1.29035 high made on Apr 18th 2017 and jumped till 1.29170 yesterday. The pair has close slightly above the high.

In the European session, cable breaks the yesterday high of 1.29170 and jumped till 1.29566 at the time of writing.  It is currently trading around 1.29428.

The pair has shown minor weakness till 1.2920 as UK GDP growth slows to 0.3% in Q1.Quarterly GDP growth moderated to 0.3% in the three months from 0.7%.On the lower side, near term support is around 1.2900 (23.6% retracement of 1.27549 and 1.29566) and nay break below targets 1.2850 (100 – H EMA)/1.2815 (200- H MA). The major resistance is around 1.29570 and any break above targets 1.3000.

USD/CAD: The Canadian dollar lowered on Thursday after touching the high of 1.35296 yesterday against US dollar after White house said that Trump will not terminate the participation in NAFTA immediately.

The pair recovered sharply and has broken the top formed at 1.36475 and hits 1.3702 level yesterday. Break of 1.3647 confirms that decline from 1.46889 and 1.2460 will come to an end, a jump till 1.370/1.3838 (61.8% retracement of 1.4689 and 1.2460) is possible.

Short term trend is still bullish as long as support 1.3410 holds. 

On the lower side, major near-term support is around 1.3410 and any break below will drag the pair down till 1.3310 (100- EMA)/1.3220 (Apr 13th 2017 low). The minor support is around 1.3480.

It is good to buy on dips around 1.3640 with SL around 1.35900 for the TP of 1.3710/1.3838.

USD/CHF: This pair has once again retreated after showing a minor above 200- day MA. It is currently trading around 0.99032 0.4% lower.

The near term resistance is around 1.000 and any break above target 1.0013 (55- day EMA). Any break above 1.0024 will take the pair till 1.00413 (61.8% retracement of 1.03435 and 0.98135)/1.0120/1.0170.On the lower side, support stands at 0.9860 and any decline below that will drag the pair till 0.9800.

AUD/USD: Aussie has mildly recovered after making a low of 0.7440 made yesterday. It is currently trading around 0.74735 0.11% higher. On the lower side, near term support is around 0.7450 and break below targets 0.7380 (61.8% retracement of 0.71599 and 0.7749)/ 0.7330 (161.8% retracement of 0.74910 and 0.77493) likely.

The pair’s near term resistance is around 0.75130 (23.6% retracement of 0.77479 and 0.74400) and any break above targets 0.7550 (200- day MA) 0.7580/0.7610 (Apr 17th 2017 high)/0.7650.

Equities Recap

European shares were little up although in early deals on Friday investors took profits at the end of a strong week with earnings taking center stage as political worries subsided, while UBS soared after a profit beat.

The STOXX 50 index by 0.07 pct, DAX was flat to slightly lower by 0.03 pct and France's CAC was flat, while UK's FTSE also was down 0.32 pct by 12:01GMT.

UBS rallied 3.7 pct as a long-awaited turnaround in its core wealth management business helped Switzerland's biggest bank deliver its second-best start to a year since the financial crisis. 

European shares drew back somewhat from 20-month highs as some unsatisfactory corporate results weighed on the market but Asian stocks powered ahead.

U.S. stock futures signal higher open as Treasuries steady. In an interview with Reuters, Trump called the five-year-old trade pact with South Korea "unacceptable" and said it would be targeted for renegotiation after his administration completes a revamp of the North American Free Trade Agreement (NAFTA) with Canada and Mexico. 

Trump's comments stunned South Korean financial markets, sending Seoul stocks and the won into reverse.

Saturday marks Trump's 100th day in office and his attacks on free trade and skepticism about his administration's ability to see through tax and spending campaign promises have dented some of the enthusiasm in markets that followed his election win.

Commodities Recap

Crude oil: Oil prices rebounded on Friday after dropping to a one-month low the previous day, prompting investors to buy at cheaper levels ahead of a May OPEC meeting at which producers could extend output cuts.

Gains were also helped by a weaker dollar and signs that non-OPEC member Russia was fully compliant with output limits agreed among major producers late last year.

Benchmark Brent crude futures were trading up 33 cents at $51.77 a barrel by 0844 GMT. U.S. light crude fetched $49.41 a barrel, up 44 cents.

Precious metals: Gold firmed on Friday as forecast-beating euro zone inflation boosted the euro against the dollar, while global stock markets retreated from Wednesday's record highs as concerns about global trade subdued appetite for cyclical assets.

The metal remains on track for its biggest weekly drop in seven, however, as appetite for nominally higher-risk assets sharpened early in the week at gold's expense.

Spot gold was up 0.2 pct at $1,266.11 an ounce at 0945 GMT, while U.S. gold futures for June delivery were up $1.90 at $1,267.80. Spot gold was down 1.4 pct from last Friday's level, its biggest weekly loss since early March.

Among other precious metals, silver was up 0.8 pct at $17.36 an ounce, while platinum advanced 0.5 pct to $944.25.

Palladium was up 0.6 pct at $819.97, having touched a two-year high of $824.50 an ounce. It was the only weekly gainer among the precious metals, set to finish the week with a 3.8 pct rise.

 Treasuries Recap

USTs: The U.S. Treasuries lost ahead of Federal Open Market Committee (FOMC) member Lael Brainard’s speech, scheduled to be held later in the day. The yield on the benchmark 10-year Treasury rose 1 basis point to 2.31 pct, the super-long 30-year bond yields jumped 1-1/2 basis points to 2.98 pct while the yield on short-term 2-year note also traded close to 1 basis point higher at 1.26 pct.

UK gilts: The UK gilts slumped after witnessing a rise in the country’s first-quarter gross domestic product (GDP), released today. The yield on the benchmark 10-year gilts, jumped 3 basis points to 1.09 pct, the super-long 30-year bond yields also climbed nearly 1-1/2 basis points to 1.72 pct while the yield on the short-term 2-year traded nearly 2-1/2 basis points higher at 0.09 pct.

German bunds: The German bunds plunged after reading the Eurozone’s higher-than-expected consumer price inflation for the month of April, which added to the disappointment in safe-haven assets. The yield on the benchmark 10-year bond, jumped 5 basis points to 0.35 pct, the long-term 30-year bond yields surged nearly 5-1/2 basis points to 1.12 pct and the yield on the short-term 2-year bond traded 2 basis points higher at -0.72 pct.

Australia: The Australian government bonds rallied, tracking firmness in the global debt market. Also, investors are eyeing the Reserve Bank of Australia’s (RBA) monetary policy meeting, scheduled to be held on May 2 for further direction in the debt market. The yield on the benchmark 10-year Treasury note, plunged 3-1/2 basis points to 2.58 pct, the yield on 15-year note also slumped 3-1/2 basis points to 2.98 pct and the yield on short-term 2-year traded 2-1/2 basis points lower at 1.66 pct.

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