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Europe Roundup: Sterling at 1-1/2 month peak, euro benefits from Fed pause expectations, investor eye U.S. CPI figures - Friday, January 11th, 2019

Market Roundup

  • United Kingdom Nov 2018 industrial output yy decrease to -1.5 % (forecast -0.7 %) vs previous -0.9 % (revised from -0.8 %)
     
  • United Kingdom Nov 2018 manufacturing output yy decrease to -1.1 % (forecast -0.7 %) vs previous -0.7 % (revised from -1 %)
     
  • United Kingdom Nov 2018 industrial output mm increase to -0.4 % (forecast 0.2 %) vs previous -0.5 % (revised from -0.6 %)
     
  • United Kingdom Nov 2018 services yy increase to 1.9 % vs previous 1.8 %
     
  • United Kingdom Nov 2018 goods trade balance. Non-EU increase to -3.92 GBP (forecast -3.7 GBP) vs previous -4.32 GBP (revised from -4.25 GBP)
     
  • United Kingdom Nov 2018 goods trade balance GBP decrease to -12.02 GBP (forecast -11.4 GBP) vs previous -11.95 GBP (revised from -11.87 GBP)
     
  • United Kingdom Nov 2018 construction O/P vol mm increase to 0.6 % (forecast 0.2 %) vs previous -0.2 %
     
  • United Kingdom Nov 2018 construction O/P vol yy decrease to 3 % (forecast 2.5 %) vs previous 4.1 % (revised from 3.8 %)
     
  • United Kingdom Nov 2018 GDP estimate yy decrease to 1.4 % (forecast 1.3 %) vs previous 1.6 % (revised from 1.5 %)
     
  • United Kingdom Nov 2018 services mm increase to 0.3 % vs previous 0.2 %
     
  • United Kingdom Nov 2018 GDP estimate mm increase to 0.2 % (forecast 0.1 %) vs previous 0.1 %
     
  • United Kingdom Nov 2018 manufacturing output mm increase to -0.3 % (forecast 0.3 %) vs previous -0.6 % (revised from -0.9 %)
     
  • Italy Nov 2018 industrial output yy wda decrease to -2.6 % (forecast 0.2 %) vs previous 1 %
     
  • Italy Nov 2018 industrial output mm sa decrease to -1.6 % (forecast -0.3 %) vs previous -0.1 % (revised from 0.1 %)

Economic Data Ahead

  • (0830 ET/1330 GMT) The U.S. consumer price index likely decreased 0.1 percent in December after staying flat in November. while in the 12 months through December, the CPI is expected to have risen 2.2 percent.  Excluding food and energy, the core CPI probably rose 0.2 percent, matching the gain in the previous month.
     
  • (1300 ET/1800 GMT) Baker Hughes reports U.S. Oil Rig Count. 
     
  • (1400 ET/1900 GMT) The U.S. reports its monthly budget statement for the month of December. The government is likely to show budget deficit narrowed to $12 billion from a deficit of $205 billion in the previous month.
     

Key Events Ahead

  • (1900 ET/0000 GMT) Federal Reserve Vice Chair Richard Clarida is expected to speak at the Money Marketeers dinner in New York.

FX Beat

DXY: The dollar index slumped, crawling towards a near 3-month low hit in the prior session, after Chairman Jerome Powell reiterated the Federal Reserve will be patient about raising interest rates. The greenback against a basket of currencies trades 0.2 percent down at 95.35, having touched a low of 95.03 the day before, its lowest since Oct. 17. FxWirePro's Hourly Dollar Strength Index stood at -18.70 (Neutral) by 1000 GMT.

EUR/USD: The euro steadied above the 1.1500 handle and was poised for its biggest weekly rise in over four months, as the greenback weakened on cautious signals from the Federal Reserve about further rate hikes. The European currency traded 0.2 percent up at 1.1527, having touched a high of 1.1569 on Thursday, its highest since Oct. 17. FxWirePro's Hourly Euro Strength Index stood at 8.82 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1599 (October 11 High), a break above targets 1.1621 (October 16 High). On the downside, support is seen at 1.1463 (October 4 Low), a break below could drag it till 1.1411 (Jan. 8 Low).

USD/JPY: The dollar declined, reversing most of its previous session gains, as expectations of a slowdown in growth, both in the United States as well as globally, and speculation the Fed may pause interest rates hikes dented the bid tone around the greenback. The major was trading 0.2 percent down at 108.26, having hit a low of 107.77 on Thursday, its lowest since Jan 4. FxWirePro's Hourly Yen Strength Index stood at -17.88 (Neutral) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. consumer price index and monthly budget statement. Immediate resistance is located at 109.08 (January 8 High), a break above targets 109.46 (April 26 High). On the downside, support is seen at 107.65 (April 23 Low), a break below could take it lower 107.35 (April 20 Low).

GBP/USD: Sterling rallied to a 1-1/2 month peak after data showed Britain's economy grew in the three months to November despite the approach of Brexit. Meanwhile, separate figures showed UK's services sector rose by 0.3 percent over the three months to November. The major traded 0.6 percent up at 1.2816, having hit a high of 1.2850 earlier; it’s highest since November 26. FxWirePro's Hourly Sterling Strength Index stood at -28.85 (Neutral) 1000 GMT. Immediate resistance is located at 1.2884 (November 19 High), a break above could take it near 1.2927 (November 22 High). On the downside, support is seen at 1.2706 (January 8 Low), a break below targets 1.2680 (December 31 Low). Against the euro, the pound was trading 0.2 percent up at 90.32 pence, having hit a low of 90.61, it’s lowest since January 3.

USD/CHF: The Swiss franc gained, hovering towards a 3-1/2 month peak touched in the prior session as the greenback slumped on Federal Reserve's dovish stance. The major trades 0.2 percent down at 0.9823, having touched a low of 0.9716 on Thursday; it’s lowest since September 27. FxWirePro's Hourly Swiss Franc Strength Index stood at -127.72 (Highly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 0.9856 (October 1 High) and any break above will take the pair to next level till 0.9906 (January 3 High). The near-term support is around 0.9787 (January 7 Low), and any close below that level will drag it till 0.9732 (January 9 Low).

Equities Recap

European shares advanced, boosted by gains in the industrial sectors; while sterling hit 1-1/2 month peak after UK cabinet ministers said Brexit to be delayed beyond March 29.

The pan-European STOXX 600 index surged 0.3 percent at 349.91 points, while the FTSEurofirst 300 index rallied 0.2 percent to 1,375.73 points.

Britain's FTSE 100 trades 0.4 percent gained at 6,967.09 points, while mid-cap FTSE 250 gained 0.2 to 18,476.35 points.

Germany's DAX rose 0.05 percent at 10,924.61 points; France's CAC 40 trades 0.1 percent higher at 4,809.86 points.

Commodities Recap

Crude oil prices surged by more than 1 percent to hit a 1-month peak and were on track for solid weekly gains after financial markets were lifted by hopes the United States and China may soon resolve their trade disputes. International benchmark Brent crude was trading 1.4 percent up at $62.07 per barrel by 1015 GMT, having hit a high of $62.45 earlier, its highest since December 7. U.S. West Texas Intermediate was trading 1.4 percent higher at $53.00 a barrel, after rising as high as $53.29, its highest since the December 7.

Gold prices rallied as the dollar retreated on expectations the Federal Reserve may pause interest rate hikes if the U.S. economy slows this year. Spot gold rose 0.5 percent to $1,292.43 per ounce at 1020 GMT, having touched a high of $1,298.42 on Friday, its highest level since June 15 and was heading for a fourth straight weekly gain. U.S. gold futures were up 0.5 percent at $1,294.3 per ounce.

Treasuries Recap

The U.S. Treasuries rallied during late afternoon session ahead of the country’s consumer price inflation data for the month of December, scheduled to be released today by 13:30GMT. The yield on the benchmark 10-year Treasuries slumped 2 basis points to 2.711 percent, the super-long 30-year bond yields edged nearly 1 basis point lower to 3.043 percent and the yield on the short-term 2-year also suffered 2 basis points to 2.545 percent.

The United Kingdom’s gilts remained mixed during the afternoon session, after the country’s manufacturing production for the month of November fell, coupled with a better-than-expected rise in the country’s m/m gross domestic product (GDP) for the similar period. The yield on the benchmark 10-year gilts, slipped 1 basis point to 1.266 percent, the super-long 30-year bond yields rose nearly 1 basis point to 1.806 percent while the yield on the short-term 2-year jumped 1-1/2 basis points to 0.783 percent.

The longer-dated Japanese government bond prices edged higher, with the benchmark 10-year yield down by half a basis point to 0.015 percent. The 20-year and the 30-year yields dipped one basis point each to 0.475 percent and 0.700 percent, respectively. The 40-year yield also fell one basis point, to 0.795 percent. The 10-year JGB futures gained 0.02 point to 152.53.

The Australian government bonds traded flat during Asian session Friday as investors remain side-lined in quiet trading despite better-than-expected November retail sales data. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, traded flat at  2.315 percent, the yield on the long-term 30-year bond remained steady at 2.843 percent and the yield on short-term 2-year stood at 1.899 percent.

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April 19 08:00 UTC Released

ITConsumer Confidence

Actual

110.5 %

Forecast

111.2 %

Previous

111.2 %

April 19 08:00 UTC Released

ITMFG Business Confidence

Actual

100.6 %

Forecast

100.7 %

Previous

100.8 %

January 31 00:00 UTC 638427638427m

ARAnnual Primary Balance*

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Forecast

2016 bln ARS

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Bln AR bln ARS

January 31 00:00 UTC 638427638427m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 22 19:00 UTC 650247650247m

ARTrade Balance

Actual

Forecast

Previous

-1541 %

January 31 00:00 UTC 638427638427m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 22 19:00 UTC 650247650247m

ARTrade Balance

Actual

Forecast

Previous

-1541 %

January 31 00:00 UTC 638427638427m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 638427638427m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 638427638427m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

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