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Europe Roundup: Sterling eases ahead of Brexit negotiation talks, euro at 2-week low on EZ economic slowdown fears, European shares volatile - Friday, February 8th, 2019

Market Roundup

  • Greece Dec 2018 industrial output yy decrease to 1.1 % vs previous 4.2 % (revised from 3.1 %)
     
  • Italy Dec 2018 industrial output yy wda decrease to -5.5 % (forecast -3 %) vs previous -2.6 %
     
  • Italy Dec 2018 industrial output mm sa increase to -0.8 % (forecast 0.4 %) vs previous -1.7 % (revised from -1.6 %)
     
  • France Dec 2018 industrial output mm increase to 0.8 % (forecast 0.6 %) vs previous -1.5 % (revised from -1.3 %)
     
  • France Q4 2018 non-farm payrolls qq stays flat at 0.1 % vs previous 0.1 %
     
  • Germany Dec 2018 current account - balance nsa increase to 28.4 eur vs previous 21.4 eur
     
  • Germany Dec 2018 trade balance, eur, sa increase to 19.4 eur (forecast 18.4 eur) vs previous 19 eur
     
  • Germany Dec 2018 trade balance, eur, sa decrease to 13.9 eur (forecast 18.4 eur) vs previous 19 eur
     
  • Germany Dec 2018 imports mm sa increase to 1.2 % (forecast 0.2 %) vs previous -1.6 %
     
  • Germany Dec 2018 exports mm sa increase to 1.5 % (forecast 0.2 %) vs previous -0.4 %
     
  • Switzerland Jan 2019 unemployment rate adjusted stays flat at 2.4 % (forecast 2.4 %) vs previous 2.4 %
     
  • Switzerland Jan 2019 unemployment rate adjusted stays flat at 2.4 % (forecast 2.4 %) vs previous 2.4 %
     
  • Switzerland Jan 2019 unemployment rate adjusted increase to 2.8 % vs previous 2.7 %
     

Economic Data Ahead

  • (0815 ET/1315 GMT) Canadian Mortgage and Housing Corp will report housing starts for the month of January. The indicator is expected to rise at a seasonally adjusted annualized rate of 205,000 after increasing 213,000 in the previous month.
     
  • (0830 ET/1330 GMT) The Statistics Canada releases employment report for January. The economy probably added 8,000 jobs, compared to a rise of 9,300 jobs in December, while the participation rate is expected to remain steady at 65.4 percent.
     
  • (0830 ET/1330 GMT) Canada's unemployment rate is expected to edge up to 5.7 percent in January from 5.6 percent in December.
     
  • (1300 ET/1800 GMT) Baker Hughes reports U.S. Oil Rig Count. 
     

Key Events Ahead

  • (1315 ET/1815 GMT) Federal Reserve Bank of San Francisco President Mary Daly is expected to participate in a moderated conversation before the Bay Area Council Economic Institute's 12th Annual Economic Forecast Conference.

FX Beat

DXY: The dollar index rallied to an over 1-month peak after data released yesterday showed the number of Americans filing applications for unemployment benefits declined from near a 1-1/2-year high last week, indicating some moderation in the pace of job growth. The greenback against a basket of currencies trades 0.1 percent up at 96.65, having touched a high of 96.69, its highest since January 3. FxWirePro's Hourly Dollar Strength Index stood at 95.49 (Slightly Bullish) by 0900 GMT.

EUR/USD: The euro slumped to a 2-week low as weaker-than-expected economic data indicated an economic slowdown in Europe was spreading amid growing trade tensions between the United States and China. The European currency traded 0.1 percent down at 1.1340, having touched a low of 1.1322 earlier, its lowest since Jan. 25. FxWirePro's Hourly Euro Strength Index stood at -76.37 (Slightly Bearish) by 0900 GMT. Immediate resistance is located at 1.1406 (January 17 High), a break above targets 1.1474 (December 21 High). On the downside, support is seen at 1.1306 (Jan. 3 Low), a break below could drag it till 1.1269 (December 14 Low).

USD/JPY: The dollar consolidated within narrow ranges against the Japanese yen, as investors remained on the sidelines ahead of the next round of trade talks in Beijing.  The major was trading flat at 109.80, having hit a high of 110.16 on Monday, its highest since December 31. FxWirePro's Hourly Yen Strength Index stood at 92.65 (Slightly Bullish) by 0900 GMT. Investors’ will continue to track the broad-based market sentiment, as U.S. economic calendar remains absolutely data empty. Immediate resistance is located at 109.95 (Jan. 25 High), a break above targets 110.47 (Dec. 31 High). On the downside, support is seen at 109.16 (Jan. 28 Low), a break below could take it lower at 108.80 (Jan. 30 Low).

GBP/USD: Sterling declined on doubts that Britain will make progress in coming days in negotiations on its departure from the European Union. On Thursday, the major slumped to a 2-1/2 week low after the Bank of England stated that Britain faced its weakest economic growth in a decade due to Brexit uncertainty. The major traded 0.2 percent down at 1.2932, having hit a low of 1.2854 on Thursday; it’s lowest since January 22. FxWirePro's Hourly Sterling Strength Index stood at 71.42 (Bullish) 0900 GMT. Immediate resistance is located at 1.3001 (January 17 High), a break above could take it near 1.3047 (November 13 High). On the downside, support is seen at 1.2879 (November 14 Low), a break below targets 1.2827 (November 12 Low). Against the euro, the pound was trading 0.1 percent down at 87.60 pence, having hit a low of 88.21 on Tuesday, it’s lowest since Jan. 22.

USD/CHF: The Swiss franc steadied near a 2-1/2 month low hit in the prior session, as the greenback rallied to an over 1-month peak. The major trades flat at 1.0021, having touched a high of 1.0028 on Thursday; it’s highest since November 16. FxWirePro's Hourly Swiss Franc Strength Index stood at -109.03 (Highly Bearish) by 0900 GMT. On the higher side, near-term resistance is around 1.0048 (November 2 High) and any break above will take the pair to next level till 1.0070 (November 8 High). The near-term support is around 0.9961 (January 22 Low), and any close below that level will drag it till 0.9889 (December 7 Low).

Equities Recap

European shares traded in a volatile market, amid worries about a broadening global economic slowdown and trade tensions between the United States and China.

The pan-European STOXX 600 index rallied 0.05 percent at 360.29 points, while the FTSEurofirst 300 index surged 0.2 percent to 1,419.89 points.

Britain's FTSE 100 trades 0.3 percent up at 7,114.15 points, while mid-cap FTSE 250 gained 0.05 to 18,797.99 points.

Germany's DAX rose 0.1 percent at 11,029.96 points; France's CAC 40 trades 0.2 percent higher at 4,994.97 points

Commodities Recap

Crude oil prices declined, dragged lower by worries over a global economic slowdown, however, OPEC-led supply cuts and U.S. sanctions against Venezuela provided some support. International benchmark Brent crude was trading 0.2 percent down at $61.47 per barrel by 0911 GMT, having hit a low of $60.58 on Thursday, its lowest since February 1. U.S. West Texas Intermediate was trading 0.3 percent lower at $52.41 a barrel, after falling as low as $51.77 on Thursday, its lowest since the January 28.

Gold prices held gains on worries that a prolonged U.S.-China trade war could worsen global economic slowdown. Spot gold was trading flat at $1,309.21 per ounce by 0941 GMT, having touched a low of $1,302.71 on Thursday, its lowest level since Jan. 29 and on track for its first weekly loss in three. U.S. gold futures were down 0.1 percent at $1,312.70.

Treasuries Recap

The German bunds remained mixed during European session on the last trading day of the week after the country’s trade data cheered market participants beyond consensus estimates amid an otherwise, silent day that witnessed data of little economic significance. The German 10-year bond yields, which move inversely to its price, slipped nearly 1 basis point to 0.109 percent, the yield on 30-year note remained flat at 0.726 percent while the yield on short-term 2-year rose nearly 1 basis point to -0.573 percent.

The Japanese government bonds surged at the end of Asian session tracking a similar movement in the United States Treasuries, after President Donald Trump dropped the bombshell that he would not meet with Chinese leader Xi Jinping before the March 1 deadline for the 90-day trade truce. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slumped nearly 3 basis points to -0.028 percent, the yield on the long-term 30-year fell 2 basis points to 0.591 percent and the yield on short-term 2-year plunged 16-1/2 basis points to -0.164 percent.

The Australian government bonds rallied across the curve during Asian trading session on the Reserve Bank of Australia’s dovish Statement on Monetary Policy (SoMP), where it lowered its growth forecasts substantially and noted that probability of rate rise or cut more evenly balanced than previously. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell about 6 basis points to 2.089 percent (lowest since October 2016), the yield on the long-term 30-year bond also dipped 6 basis points to 2.65 percent and the yield on short-term 2-year slumped 7 basis points to 1.71 percent.

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106.9 %

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106.6 %

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97 %

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108.7 %

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113 %

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105 %

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