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Europe Roundup: Sterling eases as UK construction PMI declines, euro consolidated near 3-year peak on ECB policy tightening talk, markets eye U.S. non-farm payroll report - Friday, February 2nd, 2018

Market Roundup

  • Eurozone Dec producer prices mm decrease to 0.2 % (forecast 0.3 %) vs previous 0.6 %
     
  • Eurozone Dec producer prices yy decrease to 2.2 % (forecast 2.3 %) vs previous 2.8 %
     
  • United Kingdom Jan Markit/CIPS construction PMI decrease to 50.2 (forecast 52) vs previous 52.2
     
  • Italy Jan CPI (EU norm) prelim mm decrease to -1.6 % (forecast -1.8 %) vs previous 0.3 %
     
  • Italy Jan CPI (EU norm) prelim yy increase to 1.1 % (forecast 0.9 %) vs previous 1 %
     
  • Italy Jan consumer price prelim yy decrease to 0.8 % (forecast 0.8 %) vs previous 0.9 %
     
  • Italy Jan consumer price prelim mm decrease to 0.2 % (forecast 0.3 %) vs previous 0.4 %
     
  • Norway Jan Reg'd unemployment nsa increase to 2.6 % (forecast 2.7 %) vs previous 2.4 %
     
  • Norway Jan Reg'd unemployment sa decrease to 83.93 k (forecast 86.2 k) vs previous 87.08 k
     

Economic Data Ahead

  • (0830 ET/1330 GMT) The U.S. Labor Department releases nonfarm payrolls report for the month of January. The report is likely to show 180,000 jobs were added compared with an increase of 148,000 in December.
     
  • (0830 ET/1330 GMT) The U.S. Bureau of Labor Statistics will release labor force participation rate for the month of January. The rate stood at 62.7 percent in the previous month.
     
  • (0830 ET/1330 GMT) The U.S. Labor Department is expected to report that unemployment rate remained unchanged at a 17-year low of 4.1 percent in January.
     
  • (0830 ET/1330 GMT) The United States' average hourly earnings are likely to rise 0.3 percent in January after climbing 0.3 percent in the month before.
     
  • (0830 ET/1330 GMT) The NAPM-New York releases ISM-New York Index for the month of January. The index stood at 56.3 in the previous month.
     
  • (1000 ET/1500 GMT) The United States is likely to report that factory orders increased 1.5 percent in December, after posting a rise of 1.3 percent in the prior month.
     
  • (1000 ET/1500 GMT) The University of Michigan is likely to report that U.S. consumer sentiment index rose to 95.0 in January, after posting a final reading of 94.4 in December.
     
  • (1300 ET/1800 GMT) Baker Hughes reports U.S. Oil Rig Count. 

Key Events Ahead

  • (1330 ET/1830 GMT) Federal Reserve Bank of Dallas President Robert Kaplan participates in a moderated question-and-answer session before the Teacher Retirement System of Texas Annual Conference.
     
  • (1530 ET/2030 GMT) Federal Reserve Bank of San Francisco President John Williams speaks before the Financial Women of San Francisco, in San Francisco, Calif.

FX Beat

DXY: The dollar index rose, rebounding from a 3-year low, as investors anxiously awaited U.S. nonfarm payrolls report. The greenback against a basket of currencies traded 0.2 percent up at 88.87, having touched a low of 88.44 last week, its lowest since December 2014. FxWirePro's Hourly Dollar Strength Index stood at 1.58 (Neutral) by 1000 GMT.

EUR/USD: The euro slightly eased, but held gains near a 3-year peak on the back of euro zone's economic revival and expectations of European Central Bank's monetary tightening. The European currency traded 0.2 percent down at 1.2479, having touched a low of 1.2336 on Tuesday, its lowest since Jan. 24. FxWirePro's Hourly Euro Strength Index stood at 116.50 (Highly Bullish) by 1000 GMT. Immediate resistance is located at 1.2530, a break above targets 1.2590. On the downside, support is seen at 1.2351 (50.0% retracement of 1.2264 and 1.2537), a break below could drag it lower 1.2307 (38.2% retracement).

USD/JPY: The dollar rallied to an over 1-week high as investors awaited the U.S. January nonfarm payrolls report for the latest clues on the strength of the U.S. labor market. The major was trading 0.5 percent up at 109.89, having hit a high of 109.90 earlier, its highest since Jan. 24. FxWirePro's Hourly Yen Strength Index stood at -148.52 (Highly Bearish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. nonfarm payroll, unemployment, factory orders and FOMC member William and Kaplan's speech for further momentum. Immediate resistance is located at 110.27 (38.2% retracement of 111.49 and 108.28), a break above targets 110.66 (21-DMA). On the downside, support is seen at 108.97 (5-DMA), a break below could take it near 108.00.

GBP/USD: Sterling slumped after rising to a 6-day peak in the previous session as data released earlier showed Britain's construction sector came close to contracting for the first time since September in January as uncertainty linked to Brexit caused new orders to reduce. The economy's Markit/CIPS UK Construction PMI fell to 50.2 from 52.2 in December, well below the forecast of 52.0. The major traded 0.4 percent down at 1.4210, having hit a high of 1.4278 on Thursday, it’s highest since Jan 26. FxWirePro's Hourly Sterling Strength Index stood at 23.12 (Neutral) by 1000 GMT.  Immediate resistance is located at 1.4280, a break above could take it near 1.4300. On the downside, support is seen at 1.4103 (10-DMA), a break below targets 1.4009 (61.8% retracement of 1.3458 and 1.4345). Against the euro, the pound was trading 0.2 percent down at 87.82 pence, having hit a low of 88.33 pence on Tuesday, it’s lowest since Jan. 22.

USD/CHF: The Swiss franc retreated after rising to a 2-1/2 year high earlier in the day, as the greenback steadied ahead of highly influential U.S. January nonfarm payrolls report. The major trades 0.4 percent up at 0.9303, having touched a low of 0.9256 earlier, it’s lowest since August. 2015. FxWirePro's Hourly Swiss Franc Strength Index stood at 29.56 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 0.9346 (78.6% retracement of 0.9666 and 0.9256) and any break above will take the pair to next level till 0.9415 (68.1% retracement). The near-term support is around 0.9230 and any close below that level will drag it till 0.9200.

Equities Recap

European shares tumbled and were on course for their biggest weekly loss in six months, weighed down by losses in the banking sector, while the greenback steadied ahead of U.S. nonfarm payroll report.

The pan-European STOXX 600 index slumped 0.8 percent to 390.18 points, while the FTSEurofirst 300 index edged down 0.9 percent to 1,529.80 points.

Britain's FTSE 100 trades 0.3 percent lower at 7,467.55 points, while mid-cap FTSE 250 eased 0.4 percent to 20,101.52 points.

Germany's DAX fell 1.2 percent at 12,847.73 points; France's CAC 40 trades 1.04 percent up at 5,397.94 points.

Commodities Recap

Crude oil prices eased after rising to a 4-day high earlier in the day amid concerns about surging U.S. production. International benchmark Brent crude was trading 0.1 percent down at $69.61 per barrel by 1000 GMT, having hit a low of $67.82 on Wednesday, its lowest since Jan. 9. U.S. West Texas Intermediate was trading 0.1 percent down at $65.89 a barrel, after falling as low as $63.64 on Wednesday, its weakest since Jan. 22.

Gold prices declined ahead of U.S. jobs data later in the day, with traders looking for any implications for the outlook for U.S. monetary policy over the rest of the year. Spot gold was trading 0.2 percent down at $1,345.58 per ounce by 1002 GMT, having hit a low of 1,332.64 on Wednesday, lowest since Jan 23. U.S. gold futures were up 0.3 percent at $1,351.60 per ounce.

Treasuries Recap

The U.S. Treasuries nose-dived ahead of the country’s non-farm payrolls for the month of January and the unemployment rate for the same period, scheduled to be released today by 13:30GMT respectively. The yield on the benchmark 10-year Treasuries jumped nearly 2-1/2 basis points to 2.79 percent, the super-long 30-year bond yields surged 3-1/2 basis points to 3.04 percent and the yield on the short-term 2-year traded tad higher at 2.16 percent.

The UK gilts plunged as investors have largely shrugged-off the country’s lower-than-expected construction PMI for the month of January. The yield on the benchmark 10-year gilts, jumped 5 basis points to 1.58 percent, the super-long 30-year bond yields surged 3 basis points to 1.37 percent and the yield on the short-term 2-year traded tad higher at 0.67 percent.

The New Zealand government bonds slumped at the time of closing as investors wait to watch the country’s fourth-quarter employment report and the GlobalDairyTrade price auction, scheduled to be held early next week. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 3 basis points to 2.97 percent, the yield on 20-year climbed 4 basis points to 3.49 percent and the yield on short-term 2-year ended nearly flat at 1.94 percent.

The Japanese government bonds pared losses after the Bank of Japan (BoJ) announced early today that it would buy an "unlimited" amount of long-term bonds to curb the effect of rising yields. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1 basis point to 0.08 percent, the yield on the long-term 30-year note remained tad lower at 0.82 percent and the yield on short-term 2-year traded 1/2 basis point lower at -0.12 percent.

The Australian government bonds slumped on the last trading day of the week after the country’s producer price index for the fourth quarter of 2017 jumped beyond market expectations and higher than the prior figures as well. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 4 basis points to 2.82 percent, the yield on the long-term 30-year note surged 2 basis points to 3.43 percent and the yield on short-term 2-year traded tad higher at 2.01 percent.

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February 20 21:00 UTC Released

KRPPI Growth

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0.4 %

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0.1 %

February 20 21:00 UTC Released

KRPPI Growth YY

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1.2 %

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2.3 %

January 31 00:00 UTC 3018530185m

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January 22 19:00 UTC 4200542005m

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-1541 %

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-1541 %

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2016 bln ARS

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