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Europe Roundup: Sterling consolidates ahead of Bank of England policy decision, euro gains on upbeat manufacturing PMI, European shares firm near 2-year peak - Thursday, November 2nd, 2017

Market Roundup

  • EUR/USD 0.27%, USD/JPY -0.07%, GBP/USD -0.14%, EUR/GBP 0.4%
     
  • DXY -0.19%, DAX -0.16%, FTSE 0.29%, Brent -0.41%, Gold 0.18%
     
  • Bank of England set to raise rates for the first time since 2007
     
  • Germany Oct Markit/BME Mfg PMI 60.6 vs 60.5, forecast 60.5
     
  • Trump tax drive nears major milestone as U.S. House readies bill
     
  • Oct was strongest month for euro zone factories in almost 7 years –PMI
     
  • Great Britain Oct Markit/CIPS Cons PMI 50.8 vs 48.1, forecast 48.1
     
  • Germany Oct Unemployment Chg SA -11k vs -23k, forecast -10k, revised -22k
     
  • Germany Oct Unemployment Rate SA 5.6% vs 5.6%, forecast 5.6%
     
  • EZ Oct Markit Mfg Final PMI 58.5 vs 58.6, forecast 58.6
     
  • Bitcoin skyrockets above $7,000 for first time ever
     
  • Catalan secessionist leaders to appear in court, without Puigdemont
     
  • Gold hits 1-week high; Fed chair pick in focus

Economic Data Ahead

  • (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 2,000 to a seasonally adjusted 233,000 for the week ended Oct. 27, while continuing claims for the week ended Oct. 20 is expected to rise to 1.897 million from previous 1.893 million.
     
  • (0830 ET/1230 GMT) The U.S. Labor Department is likely to report that preliminary nonfarm productivity increased at a 2.4 percent annualized rate in the third-quarter after rising at a 1.5 percent pace in the second quarter.
     
  • (0830 ET/1230 GMT) The U.S. Labor Department will release labor costs report for the third quarter. The indicator is expected to rise 0.5 percent from previous 0.2 percent. 
     
  • (0945 ET/1345 GMT) The NAPM-New York releases ISM-New York Index for the month of October. The index stood at 49.7 in the previous month.
     
  • (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending October 27.
     
  • (1830 ET/ 2230 GMT) The Australian Industry Group (AiG) releases its Performance of Services Index for the month of September. The index stood at 52.1 in August.
     

Key Events Ahead

  • (0800 ET/1200 GMT) Bank of England policymakers will meet to vote on interest rate decision and release the inflation report along with the minutes of its meeting in London.
     
  • (0830 ET/1230 GMT) Bank of England Governor Mark Carney's Speech.
     
  • (0830 ET/1230 GMT) Federal Reserve Board Governor Jerome Powell gives introductory remarks before the Alternative Reference Rates Committee Roundtable in New York via a pre-recorded video.
     
  • (1145 ET/1545 GMT) FedTrade Operation 15-year Fannie Mae / Freddie Mac (max $490 mn)
     
  • (1220 ET/1620 GMT) New York Fed President William Dudley gives closing remarks at the Alternative Reference Rates Committee Roundtable in New York.
     
  • (1815 ET/2215 GMT) Atlanta Fed chief Raphael Bostic participates in a panel on "The Vital Role of Government Statistics" before the Association for Public Policy Analysis and Management's 39th Annual Fall Research Conference in Chicago.

FX Beat

DXY: The dollar index edged down, reversing some of its previous session gains as investors took profits after the U.S. Federal Reserve left interest rates unchanged on Wednesday. The greenback against a basket of currencies traded 0.2 percent down at 94.64, having touched a low of 94.41 earlier, its lowest since Oct. 26. FxWirePro's Hourly Dollar Strength Index stood at -80.61 (Slightly Bearish) by 1000 GMT.

EUR/USD: The euro trimmed gains after rising to a 1-week high, after data showed eurozone's final manufacturing Purchasing Managers' Index rose to 58.5 in October from September's 58.1, below a preliminary estimate of 58.6 but its highest since February 2011 and the second-highest in over 17 years. The European currency traded 0.2 percent up at 1.1641, having touched a high of 1.1671 earlier, its highest since Oct. 26. FxWirePro's Hourly Euro Strength Index stood at 58.52 (Bearish) by 1000 GMT. On the lower side, the near term support is around 1.15450 (161.8% retracement of 1.16691 and 1.1880) and any convincing break below will drag the pair down till 1.1500/1.1400. On the higher side, near-term resistance is around 1.1685 and any break above will take it to next level till 1.1720 /1.1755 (20- day MA).

USD/JPY: The dollar reversed some of its early session losses to trade above the 114.00 handle, on the back of increasing expectations for an eventual December Fed rate hike and a modest rebound in the U.S. Treasury bond yields. The major was trading 0.1 percent down at 114.10, having hit a low of 112.95 on Tuesday, its lowest since Oct. 20. FxWirePro's Hourly Yen Strength Index stood at -97.23 (Slightly Bearish) by 1000 GMT. On the lower side, any close below 112.30 (233- day MA) confirms minor weakness, a decline till 111.60 (55- day EMA)/111.13 likely. Any convincing close above 114.50 (161.8% fib) confirms minor bullishness, a jump till 116 likely.

GBP/USD: Sterling consolidated within narrow ranges as investors remained from taking big positions ahead of the Bank of England policy decision, where it is widely expected to hike interest rates for the first time in nearly a decade. Markets seem to have ignored better-than-expected UK Construction Purchasing Managers' Index, which unexpectedly grew to 50.8 from 48.1 in September. Sterling traded flat at 1.3238, having hit a high of 1.3320 the day before, its highest since Oct. 16. FxWirePro's Hourly Sterling Strength Index stood at -26.66 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 1.3340 and any break above will take the pair to next level till 1.3400/1.3420 (61.8% fibo). On the lower side, near-term support is around 1.3193 (20- day MA) and any break below will drag it to next level till 1.3140 (61.8% fibo)/1.3070/1.30270. Against the euro, the pound was trading 0.3 percent down at 87.97 pence, having hit a high of 87.33 pence the prior day, its highest since mid-June.

USD/CHF: The Swiss rebounded from a 5-1/2 month low as the greenback eased on uncertainty around the next U.S. Federal Reserve chair. The major trades 0.4 percent down at 0.9995, having touched a high of 1.0037 the day before, it’s highest since May. 12. FxWirePro's Hourly Swiss Franc Strength Index stood at -101.64 (Highly Bearish) by 1000 GMT. The near-term support stands at 0.9930 (7- day MA) and any break below will drag the pair to next level till 0.9900/0.9860 (233- H MA). The major resistance is around 1.000 and any break above will take it to next level till 1.0040/1.0100.

AUD/USD: The Australian dollar rallied to a 1-week peak after data showed approvals to build new homes proved surprisingly strong in September, while the country's trade surplus rose to A$1.75 billion. The Aussie trades 0.3 percent up at 0.7701 having hit a high of 0.7726 earlier in the session; it’s highest since Oct. 25. FxWirePro's Hourly Aussie Strength Index stood at 128.69 (Highly Bullish) by 1000 GMT. On the lower side, the pair should close below 0.7648 (233 –day MA) and any close below targets 0.7600/0.7550. The near-term resistance is around 0.7743 (23.6% fibo) and any break above targets 0.7775 (20- day MA)/0.7822 (55 – day EMA).

Equities Recap

European shares steadied near 2-year peak as investors refrained from taking positions ahead of the Bank of England's policy meeting.

The pan-European STOXX 600 index lost 0.05 percent to 396.70 points, while the FTSEurofirst 300 index eased 0.1 percent to 1,558.44 points.

Britain's FTSE 100 trades 0.1 percent higher at 7,494.85 points, while mid-cap FTSE 250 fell 0.05 percent to 20,319.54 points.

Germany's DAX fell 0.2 percent at 13,443.40 points; France's CAC 40 trades 0.05 percent down at 5,514.26 points.

Commodities Recap

Crude oil prices declined, extending previous session losses on the back of higher production in the United States, despite supply cuts by OPEC and other major exporters tightening the market. International benchmark Brent crude was trading 0.2 percent down at $60.27 per barrel by 0927 GMT, having hit a high of $61.68 the day before, its highest since July 2015. U.S. West Texas Intermediate was trading 0.1 percent down at $54.22 a barrel, after rising as high as $55.19 the prior day, its highest since Feb. 23.

Gold prices rallied to a one-week high as the dollar weakened, while the market awaited the announcement of a new chair of the U.S. Federal Reserve, expected later in the day. Spot gold was 0.1 percent up at $1,275.76 per ounce at 0933 GMT, after rising to a high of $1,281.28 earlier, the highest since Oct. 26. U.S. gold futures edged up 0.1 percent to $1,278.80 per ounce.

Treasuries Recap

The U.S. Treasuries flat as investors wait to watch the Federal Open Market Committee (FOMC) members Powell, Dudley and Bostic’s speeches, scheduled for later in the day. The yield on the benchmark 10-year Treasury remained flat at 2.37 percent, the super-long 30-year bond yields hovered around 2.86 percent and the yield on short-term 2-year note also traded steady at 1.62 percent.

The UK gilts slightly fell after the country’s construction PMI for the month of October widely surpassed market expectations, coming in at 50.8 vs consensus estimates of 48.1. The yield on the benchmark 10-year gilts, jumped nearly 2 basis points to 1.36 percent, the super-long 30-year bond yields also climbed close to 2 basis points to 1.91 percent and the yield on the short-term 2-year too traded 2 basis points higher at 0.50 percent.

The German bunds slid after the country’s manufacturing PMI for the month of October remained unchanged and the number of unemployed people fell during the period. The German 10-year bond yields, which move inversely to its price, rose nearly 1-1/2 basis points to 0.38 percent, the yield on 30-year note surged nearly 2 basis points to 1.25 percent while the yield on short-term 2-year traded flat at -0.74 percent.

The New Zealand bonds gained at the time of closing as political uncertainties continued to hover around, sending bond prices higher amid a muted trading session that witnessed data of little economic significance. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.91 percent, the yield on the 20-year note tad lower at 3.46 percent and the yield on short-term 2-year also slid 1 basis point to 1.99 percent.

The Japanese bonds gained after the Bank of Japan bought more of long-term bonds in its daily market operations. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 0.056 percent, the yield on long-term 30-year also slipped 1 basis point to 0.847 percent and the yield on short-term 2-year traded steady at -0.158 percent.

The Australian bonds gained following firmness in the U.S. Treasuries after President Donald Trump nominate Federal Reserve Governor Jerome Powell to lead the U.S. central bank, hinting the monetary policy would be consistent at the current pace. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 5-1/2 basis points to 2.660 percent, the yield on the long-term 30-year note also dipped 5-1/2 basis points to 3.421 percent and the yield on short-term 2-year slid 2-1/2 basis points to 1.824 percent.

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2017-11-23 11:36:21
0m

November 23 12:30 UTC Released

BRForeign Direct Investm't*

Actual

8.2 Bln USD

Forecast

7.2 Bln USD

Previous

1.0000 Bln USD

November 23 12:30 UTC Released

BRCurrent Account*

Actual

-0.343 Bln USD

Forecast

-1 Bln USD

Previous

0.657 Bln USD

November 23 13:00 UTC 1717m

RUCbank Wkly Reserves*

Actual

Forecast

Previous

426.4 Bln USD

November 23 13:00 UTC 1717m

ZAPrime Rate*

Actual

Forecast

Previous

10.25 %

November 23 13:00 UTC 1717m

ZARepo Rate*

Actual

Forecast

6.75 %

Previous

6.75 %

November 23 13:30 UTC 4747m

CARetail Sales MM

Actual

Forecast

0.9 %

Previous

-0.3 %

November 23 13:30 UTC 4747m

CARetail Sales Ex-Autos MM

Actual

Forecast

1 %

Previous

-0.7 %

November 23 14:00 UTC 7777m

MXIGAE Econ Activity MM

Actual

Forecast

0.14 %

Previous

0.21 %

November 23 14:00 UTC 7777m

MX1st Hlf-Mth Core Infl YY*

Actual

Forecast

4.71 %

Previous

4.75 %

November 23 14:00 UTC 7777m

MX1st Hlf-Mth Core Infl YY*

Actual

Forecast

0.73 %

Previous

0.62 %

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