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Europe Roundup: Sterling eases ahead of May-Juncker meeting, euro near 2-week peak on ECB Praet's comments, European shares advance - Wednesday, February 20th, 2019

Market Roundup

  • United Kingdom Feb 2019 CBI trends - orders decrease to 6 balance (forecast -3 balance) vs previous 8 balance
     
  • Greece Dec 2018 Central Bank current account decrease to -1.514 eur vs previous -1.417 eur
     
  • Germany Jan 2019 producer prices mm increase to 0.4 % (forecast -0.2 %) vs previous -0.4 %
     
  • Germany Jan 2019 producer prices yy decrease to 2.6 % (forecast 2.2 %) vs previous 2.7 %
     

Economic Data Ahead

  • (1000 ET/1500 GMT) The European Commission releases Eurozone's preliminary Consumer Confidence reading for the month of February. The index is expected to slump 7.8 percent after posting a drop of 7.9 in the prior month.
     
  • (1630 ET/2130 GMT) API reports its weekly crude oil stock.
     

Key Events Ahead

  • (1310 ET/1810 GMT) Federal Reserve Bank of Dallas President Robert Kaplan participates in a moderated question-and-answer session in Houston
     
  • (1230 ET/1730 GMT) British Prime Minister Theresa May is set to meet European President Jean-Claude Juncker in Brussels
     
  • (1400 ET/1900 GMT) The Federal Open Market Committee will release the minutes from its January 29-30, 2019 policy meeting in Washington
     
  • (2000 ET/0100 GMT) Federal Reserve Bank of San Francisco President Mary Daly will participate in a moderated conversation, "Achieving Full Employment in the Modern Economy: Associates Meeting with Mary C. Daly" hosted by Stanford University, Stanford, California. 
     

FX Beat

DXY: The dollar index gained amid optimism that Washington and Beijing are close to agreeing on a deal to end their trade conflict. The greenback against a basket of currencies trades 0.05 percent up at 96.58, having touched a low of 96.43 on Tuesday, its lowest since February 8. FxWirePro's Hourly Dollar Strength Index stood at -99.13 (Slightly Bearish) by 1000 GMT.

EUR/USD: The euro rallied to a near 2-week peak after European Central Bank chief economist Peter Praet stated that the central bank will soon discuss new, multi-year loans to banks. The European currency traded 0.05 percent up at 1.1344, having touched a high of 1.1358, its highest since Feb. 7. FxWirePro's Hourly Euro Strength Index stood at 23.45 (Neutral) by 1000 GMT. Investors’ will continue to digest ECB Praet's comments ahead of the release of the U.S. Federal Reserve's policy meeting minutes. Immediate resistance is located at 1.1368 (Feb.7 High), a break above targets 1.1394 (Jan. 23 High). On the downside, support is seen at 1.1299 (5-DMA), a break below could drag it till 1.1216 (Nov. 13 Low).

USD/JPY: The dollar surged to a near 1-week peak after U.S. President Donald Trump stated that trade talks with China were going well and suggested he was open to pushing off the March 1 deadline to complete negotiations. The major was trading 0.2 percent up at 110.78, having hit a high of 110.95, its highest since February 14. FxWirePro's Hourly Yen Strength Index stood at -80.89 (Slightly Bearish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the Fed's latest policy meeting minutes. Immediate resistance is located at 111.12 (Feb. 14 Low), a break above targets 111.40 (Dec. 26 Low). On the downside, support is seen at 110.25 (Feb.15 Low), a break below could take it lower at 109.60 (Feb. 7 Low).

GBP/USD: Sterling plunged from an over 2-week peak on fears Britain could leave the EU block in 37 days without a deal, if PM May failed to persuade European Commission chief Jean-Claude Juncker or the British parliament to modify her deal. The major traded 0.3 percent down at 1.3028, having hit a high of 1.3076 earlier; it’s highest since February 14. FxWirePro's Hourly Sterling Strength Index stood at 143.18 (Highly Bullish) 1000 GMT. Immediate resistance is located at 1.3103 (Feb. 4 High), a break above could take it near 1.3160 (January 31 High). On the downside, support is seen at 1.2993 (21-DMA), a break below targets 1.2902 (5-DMA). Against the euro, the pound was trading 0.3 percent down at 87.02 pence, having hit a high of 86.72 on Tuesday, it’s highest since Jan. 29.

USD/CHF: The Swiss franc consolidated near a 1-week peak as traders positioned ahead of the release of Federal Reserve policy minutes. The major trades flat at 1.0012, having touched a low of 1.0001 on Tuesday; it’s lowest since February 11. FxWirePro's Hourly Swiss Franc Strength Index stood at 47.38 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 1.0054 (February 18 High) and any break above will take the pair to next level till 1.0111 (November 12 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 advanced on hopes of progress in trade talks between the United States and China.

The pan-European STOXX 600 index surged 0.2 percent at 369.75 points, while the FTSEurofirst 300 index rallied 0.1 percent to 1,454.13 points.

Britain's FTSE 100 trades 0.2 percent up at 7,191.13 points, while mid-cap FTSE 250 gained 0.5 to 19,161.60 points.

Germany's DAX rose 0.3 percent at 11,339.04 points; France's CAC 40 trades 0.2 percent higher at 5,169.15 points

Commodities Recap

Crude oil prices declined, drifting away from 2019 highs, weighed down by surging U.S. supply and slowing economic growth, however, supply cuts led by producer club OPEC and Washington's sanctions on Iran and Venezuela limited downside. International benchmark Brent crude was trading 0.4 percent down at $66.15 per barrel by 1034 GMT, having hit a high of $66.81 on Monday, its highest since November 20. U.S. West Texas Intermediate was trading 0.5 percent higher at $56.32 a barrel, after rising as high as $56.75 earlier, its highest since the November 20.

Gold prices rose to a fresh 10-month high as the dollar struggled ahead of the U.S. Federal Reserve's policy meeting minutes. Spot gold was 0.3 percent up at $1,345.07 per ounce by 1037 GMT, having touched a high of $1,346.61 per ounce earlier, its highest level since April 20. U.S. gold futures were steady at $1,345.40.

Treasuries Recap

The Italian bond yields were flat to a basis point higher in early trade, while Germany's 10-year Bund yield was steady at around 0.10 percent.

The Japanese government bond prices rose modestly, the two-year JGB yield declined half a basis point to minus 0.185 percent, its lowest since November 2017. The 10-year yield fell half a basis point to a 1-1/2-month low of 0.040 percent. The 30-year yield slipped as much to 0.580 percent.

The Australian bond futures surged, with the three-year bond contract up 3.5 ticks at 98.355. The 10-year contract rose 3 ticks to 97.8950.

The New Zealand government bonds firmed, sending yields 1 to 2 basis points lower.

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108.7 %

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113 %

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