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Europe Roundup: Sterling declines following downbeat UK earning data, dollar steadies as Fed rate hike decision looms, European shares rally - Wednesday, June 14th, 2017

Market Roundup

  • EUR/USD -0.09%, USD/JPY +0.23%, GBP/USD -0.11%, EUR/GBP +0.08%
     
  • DXY +0.06%, DAX +0.74%, FTSE +0.43%, Brent -1.05%, Gold +0.13%
     
  • Some dead, at least 50 taken to hospital, as fire engulfs London tower block
     
  • China's economy holds up in May but slowing investment points to cooling
     
  • Talks between UK PM May's Conservatives and N. Ireland's DUP restart -source
     
  • Oil supply seen outpacing consumption in 2018, demand to top 100 mln bpd
     
  • ECB may face political pressure to keep policy loose: Weidmann
     
  • Great Britain Apr ILO unemployment rate 4.6% VS previous 4.6%
     
  • Germany May CPI final yy 1.5% vs previous 1.5%
     
  • Germany May HICP final yy 1.4% vs previous 1.4%
     
  • Eurozone Q1 Employment yy 1.5% vs previous 1.1%
     
  • Eurozone Apr Industrial production mm 0.5% vs previous -0.1%
     
  • Eurozone Apr Industrial production yy 1.4% vs previous 2.2%

Economic Data Ahead

  • (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that retail sales edged up 0.1 percent in May after advancing 0.4 percent in April. While excluding autos, retail sales are likely to have gained 0.2 percent, after surging 0.3 percent in the previous month.
     
  • (0830 ET/1230 GMT) The U.S. consumer price index likely remained unchanged in May after posting a 0.2 percent gain in April. While in the 12 months through May, the CPI is expected to have risen 2.0 percent.  Excluding food and energy, the core CPI probably rose 0.2 percent, after rising 0.1 percent in the previous month.
     
  • (1000 ET/1400 GMT) The U.S. Commerce Department is expected to report that business inventories declined 0.2 percent in April, after rising 0.2 percent in March.
     
  • (1400 ET/1800 GMT) The FOMC is due to conclude a two-day meeting and announce its decision on interest rates.
     
  •  (1745 ET/2145 GMT) Statistics New Zealand will release first quarter Gross Domestic Product figures.
     
  •  (1950 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending June 09.

  • (1950 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending June 09.
     

Key Events Ahead

  • (1430 ET/1830 GMT) Federal Reserve Chair Janet Yellen will address news conference

FX Beat

DXY: The dollar steadied against its major peers as investors awaited the U.S. Federal Reserve's monetary policy verdict, followed by a press conference by Fed Chair Janet Yellen. The greenback against a basket of currencies traded 0.1 percent up at 97.08, having touched a high of 97.50 on Friday, it’s highest since May 31. FxWirePro's Hourly Dollar Strength Index stood at 30.53 (Neutral) by 1100 GMT.

EUR/USD: The euro consolidated within a narrow range despite upbeat Eurozone industrial production and employment data. The economy's industrial output rose by 0.5 percent in April, in line with market expectations, while employment in the first quarter grew by 0.4 percent on the quarter and by 1.5 percent on the year. The European currency traded up at 1.1206, having touched a low of 1.1166 last week, its lowest since May 31. FxWirePro's Hourly Euro Strength Index stood at 48.83 (Neutral) by 1000 GMT. The upside remains capped by 200- HMA at 1.1232 and any break above will take the pair till 1.12850/1.1300. On the lower side, near term support is around 1.11500-1.1160 (trend line support and 21- EMA) and any break below will drag it down till 1.1100 (May 30 low)/1.10750 (May 18 low).

USD/JPY: The dollar rose against the Japanese yen, as the market's focus shifted on the Fed policy decision, with a news conference to follow from Chair Janet Yellen. Investors expect an interest rate hike and will scrutinize Fed Yellen's statement for clues on the policy outlook for the rest of the year. The major traded 0.2 percent up at 110.27, having touched a high of 110.80 on Friday, its highest since Jun. 2. FxWirePro's Hourly Yen Strength Index stood at -50.32 (Bearish) by 11400 GMT. The pair is facing support at 108 and break below will drag the pair down till 106.80. On the higher side, near term resistance is around 110.94 (21- EMA) will take it to next level till 111.71 /112.12 likely.

GBP/USD: Sterling tumbled after rising to an early high of 1.2796 as British workers' earnings including bonuses fell by an annual 0.4 percent in the three months to April.  The major traded 0.1 percent down at 1.2740, having hit a low of 1.2635 on Friday, its weakest since Apr 18. FxWirePro's Hourly Sterling Strength Index stood at -96.30 (Slightly Bearish) by 1100 GMT. On the lower side. the near term support is around 1.2614 and any break below will drag the pair till 1.2585/ (200- day MA)/1.2470 (61.8% retracement of 1.21088 and 1.30470). The near term minor resistance is around 1.2780 (support turned into resistance) and any break above will take it till 1.2840 (50% retracement of 1.30476 and 1.26359)/1.2880 (21 EMA). Against the euro, the pound traded 0.1 percent down at 87.95 pence, having hit a 7-month low of 88.66 on Monday.

USD/CHF: The Swiss franc edged down, extending losses for the sixth consecutive session, as the greenback steadied ahead of the Federal Reserve monetary policy decision. The major trades 0.2 percent up at 0.9704, having touched a high of 0.9727 on Friday, its highest since May 31. FxWirePro's Hourly Swiss Franc Strength Index stood at -78.22 (Slightly Bearish) by 1100 GMT. Any break above 0.9808 high made on May 30 will take the pair till 0.9835 (38.2% retracement of 1.00998 and 0.96220)/0.9900/0.9925 (50- day MA). The minor resistance is around 0.9700 (200- H MA)/0.97360 (61.8% retracement of 0.9808 and 0.96220). Any daily close below will 0.9617 will drag it down till 0.9580/ 0.95490 (Nov 9 low).

AUD/USD: The Australian dollar rallied to a near 2-month high, benefiting from today's better-than-expected Chinese industrial production and retail sales data. The Aussie trades 0.6 percent up at 0.7581, having touched a high of 0.7588 earlier, it’s strongest since Apr 18. FxWirePro's Hourly Aussie Strength Index stood at 39.25 (Neutral) by 1100 GMT. On the lower side, near term support is around 0.7530 (200- day MA) and any break below will drag the pair till 0.7485 (21 – EMA)/0.7385 (61.8% retracement of 0.71599 and 0.77493) /0.7325/0.7300. The near term resistance is around 0.7600 and any break above targets 0.7650/0.7700.

Equities Recap

European shares gained, strengthened by a recovery in technology stocks and better-than-expected Eurozone industrial output data and employment report.

The pan-European STOXX 600 index climbed 0.6 percent to 390.99 points, while the FTSEurofirst 300 index surged 0.6 percent to 1,536.44 points.

Britain's FTSE 100 trades 0.5 percent up at 7,537.99 points, while mid-cap FTSE 250 gained 0.7 percent to 19,996.11 points.

Germany's DAX rose 0.7 percent at 12,860.42 points; France's CAC 40 trades 0.8 percent higher at 5,306.93 points.

Commodities Recap

Crude oil prices edged up despite data showing a build in U.S. crude stocks and OPEC reporting a rise in its production. International benchmark Brent crude was trading 0.1 percent up at $48.28 per barrel by 1023 GMT, having hit a low of $47.41 on Monday, its weakest since May 5. U.S. West Texas Intermediate traded down at $45.90 a barrel, after falling as low as $45.19 on Thursday, its lowest since May 5.

Gold nudged up as the market cautiously awaited the outcome of a two-day U.S. Federal Reserve meeting, with the central bank expected to hike interest rates and give indications on its monetary policy for the rest of the year. Spot gold was up 0.1 percent at $1,267.59 per ounce by 1028 GMT, having hit a low of $1,259.22 an ounce, its lowest since Jun. 2. U.S. gold futures for August delivery were nearly flat at $1,268.90 an ounce.

Treasuries Recap

The U.S. Treasuries gained ahead of the Federal Reserve’s monetary policy decision, scheduled on June 14. The yield on the benchmark 10-year Treasury, fell nearly 1 basis point to 2.19 percent, the super-long 30-year bond yields also slipped 1 basis point to 2.85 percent and the yield on short-term 2-year note traded close to 1 basis point lower at 1.35 percent.

The UK gilts rebounded after reading the country’s unchanged unemployment rate for the month of April. The yield on the benchmark 10-year gilts, slumped nearly 3 basis points to 1.00 percent, the super-long 30-year bond yields plunged 4-1/2 basis points to 1.70 percent and the yield on the short-term 2-year traded 1-1/2 basis points lower at 0.12 percent.

The Eurozone periphery bonds gained ahead of the zone’s consumer price inflation index (CPI), scheduled to be released on June 16. Also, the Eurogroup meetings, due on June 15 will render further direction to the debt market. The benchmark German 10-year bond yields, fell nearly 1 basis point to 0.25 percent, the French 10-year bond yields, remained flat at 0.60 percent, Irish 10-year bond yield plunged 7 basis points to 0.69 percent; however, Italian equivalent slumped 3-1/2 basis points to 1.94 percent, Netherlands 10-year bonds yield traded nearly 1 basis point lower at 0.48 percent, Portuguese equivalents nose-dived nearly 5 basis points to 2.88 percent and the Spanish 10-year yields traded 1-1/2 basis points lower at 1.41 percent.

The Japanese government bonds traded flat as investors wait to watch the country’s industrial production for the month of April, scheduled for release on June 14 and the Bank of Japan’s (BoJ) 2-day monetary policy decision, due to be unveiled on June 16. The benchmark 10-year bond yield, rose 1/2 basis point to 0.06 percent, the long-term 30-year bond yields fell nearly 1 basis point to 0.82 percent while the yield on the short-term 2-year note traded flat at -0.10 percent.

The New Zealand bonds ended on a mixed tone in a silent trading session that witnessed no data of economic significance. At the time of closing, the yield on the benchmark 10-year bond, rose 1/2 basis point to 2.82 percent, the yield on 7-year note slipped 1 basis point to 2.70 percent while the yield on short-term 2-year note also ended 1 basis point lower at 1.95 percent.

The Australian bonds remained mixed as investors remain keen to watch the Federal Open Market Committee’s (FOMC) monetary policy decision, scheduled to be unveiled later today. The yield on the benchmark 10-year Treasury note, traded flat at 2.42 percent, the yield on 15-year note fell nearly 1 basis point to 2.78 percent while the yield on short-term 2-year rose nearly 1 basis point to 1.63 percent.

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