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Europe Roundup: Sterling eases amid hard-Brexit fears, euro declines as German investor morale deteriorates, European shares surge - Friday, February 22nd, 2019 

Market Roundup

  • Eurozone Jan 2019 inflation ex-tobacco index decrease to 102.73 vs previous 104.1
     
  • Eurozone Jan 2019 HICP-x tobacco yy decrease to 1.3 % vs previous 1.5 %
     
  • Eurozone Jan 2019 HICP-x tobacco mm increase to -1.1 %
     
  • Eurozone Jan 2019 HICP-x f&e mm decrease to -1.2 % vs previous 0.4 %
     
  • Eurozone Jan 2019 HICP final mm increase to -1 % (forecast -1.1 %)
     
  • Eurozone Jan 2019 HICP-x f,e,a&t final yy stays flat at 1.1 % (forecast 1.1 %) vs previous 1.1 %
     
  • Eurozone Jan 2019 HICP-x f, e, a, t final mm stays flat at -1.5 % (forecast -1.5 %) vs previous -1.5 %
     
  • Eurozone Jan 2019 HICP final yy stays flat at 1.4 % (forecast 1.4 %) vs previous 1.4 %
     
  • Eurozone Jan 2019 HICP-x f&e final yy stays flat at 1.2 % (forecast 1.2 %) vs previous 1.2 %
     
  • Germany Feb 2019 IFO expectations new decrease to 93.8 (forecast 94.2 ) vs previous 94.2
     
  • Germany Feb 2019 IFO curr conditions new decrease to 103.4 (forecast 103.9 ) vs previous 104.3
     
  • Germany Feb 2019 IFO business climate new decrease to 98.5 (forecast 99 )
     
  • Germany Q4 2018 GDP detailed yy sa stays flat at 0.6 % (forecast 0.6 %) vs previous 0.6 %
     
  • Germany Q4 2018 GDP detailed yy nsa stays flat at 0.9 % (forecast 0.9 %) vs

Economic Data Ahead

  • (0830 ET/1330 GMT) Statistics Canada is expected to report that retail sales declined 0.3 percent in December, after plunging 0.9 percent in November. While excluding autos, retail sales are likely to have eased 0.2 percent, after falling 0.6 percent in the previous month.

Key Events Ahead

  • (0840 ET/1340 GMT) Federal Reserve Bank of Atlanta President Raphael Bostic speaks in New York
     
  • (1000 ET/1500 GMT) Bank of France Governor François Villeroy speaks in Lisbon
     
  • (1015 ET/1515 GMT)  Federal Reserve Bank of New York President John Williams and Federal Reserve Bank of San Francisco President Mary Daly participates in a panel discussion in New York
     
  • (1100 ET/1600 GMT) Federal Reserve is expected to release its Monetary Policy Report to Congress.
     
  • (1115 ET/1615 GMT) ECB President Mario Draghi speaks in Bologna, Italy
     
  • (1200 ET/1700 GMT) Federal Reserve Vice Chairman Richard Clarida speaks in New York
     
  • (1230 ET/1730 GMT) Federal Reserve Bank of New York Executive Vice President Simon Potter speaks in New York
     
  • (1330 ET/1830 GMT) Federal Reserve Bank of St. Louis President James Bullard, Federal Reserve Bank of Philadelphia President Patrick Harker and Federal Reserve Vice Chair for Supervision Randal Quarles participates in panel in New York
     
  • (1730 ET/2230 GMT) Federal Reserve Bank of New York President John Williams speaks in New York
     

FX Beat

DXY: The dollar index steadied, as top U.S. and Chinese trade negotiators discuss over the details of a set of agreements aimed at ending their trade war. The greenback against a basket of currencies trades 0.05 percent up at 96.63, having touched a low of 96.29 on Wednesday, its lowest since February 6. FxWirePro's Hourly Dollar Strength Index stood at 35.07 (Neutral) by 1000 GMT.

EUR/USD: The euro eased, extending losses for the third straight session after data showed German business morale fell for the sixth time in succession in February. The European currency traded 0.05 down at 1.1330, having touched a high of 1.1371 on Wednesday, its highest since Feb. 6. FxWirePro's Hourly Euro Strength Index stood at 66.52 (Bullish) by 1000 GMT. 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 1.1308 (10-DMA), a break below could drag it till 1.1289 (Feb. 18 Low).

USD/JPY: The dollar rallied against the Japanese yen as investors continued to watch high-level talks between U.S. and Chinese trade negotiators in Washington. The major was trading 0.2 percent up at 110.87, having hit a high of 110.95 on Wednesday, its highest since February 14.  FxWirePro's Hourly Yen Strength Index stood at -75.77 (Slightly Bearish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of series of speeches by Fed officials. Immediate resistance is located at 111.05 (Feb. 13 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, extending losses for the third consecutive session, as investors remained cautious ahead of last-minute talks between the United Kingdom and the European Union on possible changes to the Brexit withdrawal agreement. The major traded 0.2 percent down at 1.3014, having hit a high of 1.3109 on Wednesday; it’s highest since February 1.  FxWirePro's Hourly Sterling Strength Index stood at -7.01 (Neutral) 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 1.2996 (21-DMA), a break below targets 1.2928 (10-DMA). Against the euro, the pound was trading 0.3 percent down at 87.12 pence, having hit a high of 86.66 on Thursday, it’s highest since Jan. 29.

USD/CHF: The Swiss franc consolidated within narrow ranges, as investors waited for signs of progress on U.S.-China trade talks. The major trades 0.5 percent down at 1.0004, having touched a low of 0.9981 on Wednesday; it’s lowest since February 11. FxWirePro's Hourly Swiss Franc Strength Index stood at 100.25 (Highly Bearish) 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, boosted by upbeat corporate earnings results, while investors waited for news from crucial U.S.-China trade talks.

The pan-European STOXX 600 index rallied 0.4 percent at 370.81 points, while the FTSEurofirst 300 index surged 0.2 percent to 1,460.01 points.

Britain's FTSE 100 trades 0.4 percent up at 7,194.31 points, while mid-cap FTSE 250 gained 0.4 to 19,312.68 points.

Germany's DAX rose 0.2 percent at 11,450.84 points; France's CAC 40 trades 0.3 percent lower at 5,213.10 points

Commodities Recap

Crude oil prices surged, supported by OPEC's ongoing supply cuts and hopes that Washington and Beijing may soon end their trade dispute. International benchmark Brent crude was trading 0.4 percent up at $67.19 per barrel by 1009 GMT, having hit a high of $67.36 on Wednesday, its highest since November 19. U.S. West Texas Intermediate was trading 0.4 percent higher at $57.06 a barrel, after rising as high as $57.56 on Thursday, its highest since the November 16.

Gold prices edged down as signs that the U.S. Federal Reserve could raise interest rates again this year dented the safe-havens appeal. Spot gold eased 0.1 percent to $1,322.30 per ounce by 1011 GMT, having touched a high of $1,346.61 per ounce on Wednesday, its highest level since April 20. U.S. gold futures were up 0.1 percent at $1,329.1 per ounce.

Treasuries Recap

The Italian government bond yields surged 3 to 5 basis points higher across much of the bond curve. Italy's 10-year bond yield was last up 3 bps at 2.86 percent. The gap over German Bund yields was 273 bps compared with around 269 bps late Thursday. The German 10-year Bund yields dipped a basis point to around 0.12 percent.

The Japanese government bond prices edged higher, with the 10-year JGB yield easing half a basis point to minus 0.050 percent. The 20-year yield slipped 1 basis point to 0.390 percent, its lowest since November 2016.

The Australian government bond futures fell, with the three-year bond contract off 5.5 ticks at 98.350. The 10-year contract dropped 4 ticks to 97.9050.

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