Menu

Search

  |   Market Roundups

Menu

  |   Market Roundups

Search

Europe Roundup: Sterling consolidates near 4-1/2 month lows amid Brexit negotiations, euro slumps on Italian political risk, European shares rally - Thursday, May 17th, 2018 

Market Roundup

  • EUR/USD -0.03%, USD/JPY 0.24%, GBP/USD 0.05%, EUR/GBP -0.07%
     
  • DXY 0.02%, DAX 0.36%, FTSE 0.13%, Brent 0.74%, Gold -0.17%
     
  • Oil hits $80 a barrel on concerns about Iran supply
     
  • EU leaders ready to offer Trump greater market access to avert a trade war
     
  • Britain considering extending EU tariffs for Brexit backstop option – source
     
  • Britain seeks $40 billion investment to boost the economy after Brexit
     
  • Japan plans retaliatory tariffs against United States - NHK

Economic Data Ahead

  • (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 4,000 to a seasonally adjusted 215,000 for the week ended May 11, while continuing claims for the week ended May 4 is expected to decline to 1.780 million from a previous reading of 1.790 million.
     
  • (0830 ET/1230 GMT) Philadelphia Federal Reserve manufacturing survey is likely to show that business activity decreased to 21.0 in May from 23.2 in April.
     
  • (0830 ET/1230 GMT) The Statistics Canada releases employment report for April. The economy is added 42,800 jobs in March.
     
  • (0830 ET/1230 GMT) The Statistics Canada will report foreign portfolio investment in domestic stocks for the month of March.
     
  • (0830 ET/1230 GMT) The Statistics Canada will release investment in foreign securities figures for the month of March.
     
  • (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending May 11.
     
  • (1030 ET/1430 GMT) The Bank of Canada will release its financial system review.
     
  • (1400 ET/1800 GMT) Mexico's central bank meets to decide its interest rate and is expected to hold benchmark rate steady at 7.50 percent

Key Events Ahead

  • (1045 ET/1445 GMT) Federal Reserve Bank of Minneapolis President Neel Kashkari is scheduled to participate in a moderated Q & A session hosted by the Minnesota Housing Finance Agency in St. Paul, Minnesota. 
     
  • (1200 ET/1600 GMT) Bank of England MPC Member Andrew G Haldane's Speech
     
  • (1330 ET/1730 GMT) Federal Reserve Bank of Dallas President Robert Kaplan is expected to participate in a moderated Q & A session before the Richardson Chamber of Commerce Annual Meeting in Richardson, Texas.
     

FX Beat

DXY: The dollar index steadied near 5-month peaks as the U.S. Treasury yields continued to rally with the 10-year government bond yield hitting its highest since 2011. The greenback against a basket of currencies trades 0.2 percent up at 93.50, having touched a high of 93.63 on Wednesday, its highest since Dec. 19. FxWirePro's Hourly Dollar Strength Index stood at 87.54 (Slightly Bullish) by 0500 GMT.

EUR/USD: The euro slumped, extending losses for the fourth straight session after data showed Eurozone's construction output fell 0.3 percent, below a forecast of 0.1 percent drop. Moreover, demands of Italian populist parties and as a fresh rise in U.S. government bond yields undermined demand for the major. The European currency traded 0.2 percent down at 1.1778, having touched a low of 1.1763 the day before, its lowest since Dec. 18. FxWirePro's Hourly Euro Strength Index stood at -78.98 (Slightly Bearish) by 1000 GMT. Immediate resistance is located at 1.1885 (5-DMA), a break above targets 1.1978 (May 7 High). On the downside, support is seen at 1.1763 (Previous Session Low), a break below could drag it till 1.1736 (Dec. 18 Low).

USD/JPY: The dollar rallied to a fresh near 5-month peak as a sudden pickup in the U.S. Treasury bond yields boosted sentiment around the greenback across the board. However, renewed geopolitical tensions in the Korean peninsula supported the Japanese Yen's safe-haven demand. The major was trading 0.2 percent up at 110.66, having hit a high of 110.74 earlier, its highest since Jan. 23. FxWirePro's Hourly Yen Strength Index stood at -86.03 (Slightly Bearish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. unemployment benefit claims and Fed officials' speeches. Immediate resistance is located at 110.98 (Jan. 16 High), a break above targets 111.48 (Jan. 18 High). On the downside, support is seen at 109.82 (5-DMA), a break below could take it lower 108.53 (10-DMA).

GBP/USD: Sterling trimmed early session gains after Prime Minister Theresa May's spokeswoman stated that Britain is still negotiating with the European Union over a workable backstop arrangement if any Brexit deal is delayed, to avoid a return to a hard border between Northern Ireland and Ireland. The major traded 0.1 percent up at 1.3494, having hit a low of 1.3451 on Tuesday, it’s lowest since Dec. 29. FxWirePro's Hourly Sterling Strength Index stood at -36.49 (Neutral) by 1000 GMT. Immediate resistance is located at 1.3608, a break above could take it near 1.3665. On the downside, support is seen at 1.3428, a break below targets 1.3405. Against the euro, the pound was trading 0.2 percent up at 87.37 pence, having hit a high of 87.13 pence earlier, it’s highest since Apr. 27.

USD/CHF: The Swiss franc consolidated within narrow ranges above the 1.0000 handle, as the U.S. dollar got a strong boost after the U.S. Treasury yields rose above levels not seen since early 2011. The major trades 0.1 percent up at 1.0021, having touched a low of 0.9957 on Monday, it’s lowest since May. 3. FxWirePro's Hourly Swiss Franc Strength Index stood at 3.65 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 1.0056 (May 10 High) and any break above will take the pair to next level till 1.0099 (May 2017 High). The near-term support is around 0.9936 and any close below that level will drag it till 0.9899.

Equities Recap

European shares advanced, boosted by commodities-related sectors, while the euro struggled near 5-month lows on worries Italian populist parties might push for debt forgiveness from the European Central Bank.

The pan-European STOXX 600 index rallied 0.2 percent at 394.07 points, while the FTSEurofirst 300 index surged 0.1 percent to 1,544.82 points.

Britain's FTSE 100 trades 0.1 percent up at 7,543.82 points, while mid-cap FTSE 250 gained 0.6 percent to 20,959.37 points.

Germany's DAX rose 0.4 percent at 13,048.52 points; France's CAC 40 trades 0.5 percent higher at 5,597.12 points.

Commodities Recap

Crude oil prices rose to their highest level since November 2014 as supplies tightened and tensions with Iran eased. International benchmark Brent crude was trading 0.7 percent up at $79.79 per barrel by 1013 GMT, having hit a high of $80.06 earlier, its highest since Nov. 2014. U.S. West Texas Intermediate was trading 0.7 percent up at $72.05 a barrel, after rising as high as $72.28 on Tuesday, its highest since Nov. 2014.

Gold prices eased, hovering towards a 5-month low hit in the previous session, as the dollar steadied against a basket of currencies and traded within sight of its 2018-peak. Spot gold fell 0.2 percent to $1,288.06 per ounce by 1016 GMT, having hit a low of $1,286.28 on Wednesday, its lowest price level since Dec. 27. U.S. gold futures for June delivery were nearly 0.3 percent lower at $1,288 per ounce.

Treasuries Recap

The U.S. Treasuries traded range-bound ahead of the country’s initial jobless claims, scheduled to be released today by 12:30GMT. Also, the 10-year TIPS auction, due today at 17:0GMT and Federal Open Market Committee’s (FOMC) members Neel Kashkari and Robert Kaplan’s speech also scheduled for today at 14:45GMT and 17:30GMT respectively, will provide further insight into the debt market. The yield on the benchmark 10-year Treasuries remained flat at 3.09 percent, the super-long 30-year bond yields hovered around 3.21 percent and the yield on the short-term 2-year steadied at 2.59 percent.

The German bunds suffered during European session as investors wait to watch the country’s producer price index for the month of April and eurozone’s March trade balance data, scheduled to be released on May 18 by 06:00GMT and 09:00GMT respectively. The German 10-year bond yields, which move inversely to its price, jumped 1-1/2 basis points to 0.62 percent, the yield on the 30-year note climbed 2 basis points to 1.32 percent and the yield on short-term 2-year traded flat at -0.55 percent.

The New Zealand bonds closed Thursday’s session on a higher note as investors covered their previous short positions amid a silent trading session that witnessed data of least economic significance. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slipped 1 basis point to 2.85 percent, the yield on the long-term 20-year note also fell 1 basis point to 3.38 percent and the yield on short-term 2-year too closed 1 basis point lower at 1.88 percent.

The Japanese government bonds remained flat during late Asian session amid a muted trading session that witnessed data of little economic significance, except for the country’s national core consumer price inflation (CPI) data, scheduled to be released today by 23:30GMT. The yield on the benchmark 10-year JGB note, which moves inversely to its price, hovered around 0.05 percent, the yield on the long-term 30-year note remained 1 basis point higher at 0.76 percent and the yield on short-term 1-year traded flat at -0.13 percent.

The Australian government bonds edged slightly lower after employment index for the month of April hits the highest level since the polling began in March 1997, pushing the benchmark 10-year bond yield to a 3-month high. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 1-1/2 basis points to 2.904 percent (3-month high), the yield on the long-term 30-year Note jumped 1 basis point to 3.380 percent and the yield on short-term 2-year up 1/2 basis point to 2.070 percent.

  • Market Data
Close

Welcome to EconoTimes

Sign up for daily updates for the most important
stories unfolding in the global economy.