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Europe Roundup: Sterling eases as no-deal Brext fears persist; Swiss franc, yen gain as trade deal optimism ebb, European shares slump - Monday, October 14th, 2019

Market Roundup

  • Oil falls due to caution over U.S.-China trade deal

Economic Data Ahead

  • No major economic data releases

Key Events Ahead

  • No significant events scheduled

FX Beat

DXY: The dollar surged after U.S. President Donald Trump said that Washington and Beijing had reached a ‘Phase 1’ trade deal. The greenback against a basket of currencies traded 0.2 percent up at 98.49, having touched a low of 98.20 in the previous session, its lowest since September 20.

EUR/USD: The euro consolidated within narrow ranges, as investors remained cautious amid a lack of clarity on U.S.-China trade ties. The European currency traded flat at 1.1028, having touched a high of 1.1062 the prior session, its highest since September 20. Immediate resistance is located at 1.1059 (78.6% retracement of 1.1109 and 1.0879), a break above targets 1.1084. On the downside, support is seen at 1.0986 (21-DMA), a break below could drag it below 1.0966 (10-DMA).

USD/JPY: The dollar declined as investors turned cautious over the progress of a comprehensive trade deal between the United States and China. The major was trading 0.2 percent down at 108.20, having hit a high of 108.62 the prior session, its highest since August 1. Investors’ will continue to track the broad-based market sentiment, as the U.S. and Japanese markets remained closed. Immediate resistance is located at 108.72 (June 17 High), a break above targets 108.99 (July 31 High). On the downside, support is seen at 107.68 (21-DMA), a break below could take it near at 107.31 (September 23 Low).

GBP/USD: Sterling plunged after Britain and the European Union stressed over the weekend that there was a long way to go before they could agree a Brexit deal. The major traded 0.8 percent down at 1.2548, having hit a high of 1.2706 on Friday, it’s highest since June 28. Immediate resistance is located at 1.2710, a break above could take it near 1.2762. On the downside, support is seen at 1.2526, a break below targets 1.2459. Against the euro, the pound was trading 0.8 percent down at 87.82 pence, having hit a high of 86.94 on Friday, it’s highest since May 15.

USD/CHF: The Swiss franc surged, extending previous session gains, as a lack of detail in the initial stages of the U.S.-China trade agreement pushed investors to safe-haven assets. The major trades 0.1 percent down at 0.9953, having touched a high of 0.9990 on Friday, it’s highest since October 4. On the higher side, near-term resistance is around 1.0006 and any break above will take the pair to next level till 1.0027. The near-term support is around 0.9924, and any close below that level will drag it till 0.9885.

Equities Recap

European shares declined as signs of progress in the China-U.S. trade dispute drew mixed reactions from investors.

The pan-European STOXX 600 index declined 0.9 percent at 387.77 points, while the FTSEurofirst 300 surged 0.8 percent to 1,523.86 points.

Britain's FTSE 100 trades 0.2 percent down at 7,209.15 points, while mid-cap FTSE 250 declined 1.3 to 19,787.76 points.

Germany's DAX eased 0.7 percent at 12,425.10 points; France's CAC 40 trades 0.9 percent lower at 5,616.97 points.

Commodities Recap

Crude oil prices declined following scant details about the first phase of a trade deal between the United States and China. International benchmark Brent crude was trading 2.1 percent down at $59.29 per barrel by 1111 GMT, having hit a high of $60.66 on Friday, its highest since September 30. U.S. West Texas Intermediate was trading 1.3 percent lower at $53.55 a barrel, after rising as high as $54.91 on Friday, its highest since September 30.

Gold prices surged as a lack of clarity on U.S.-China trade ties pushed investors back to safe haven assets. Spot gold was trading 0.5 percent up at $1,496.19 per ounce by 1114 GMT, having touched a low of $1,473.88 on Friday, its lowest since October 1. U.S. gold futures gained 0.7 percent to $1,498.90 per ounce.

Treasuries Recap

The U.S. Treasuries suffered during the afternoon session amid a muted trading day that witnessed data of little economic significance ahead of the country’s retail sales for the month of September, scheduled to be released on October 16 by 12:30GMT. Further, a host of 3-tier economic data is due for release by end of this week, which shall add further direction to the debt markets. The yield on the benchmark 10-year Treasury yield surged 2 basis points to 1.734 percent, the super-long 30-year bond yield also gained nearly 2 basis points to 2.197 percent and the yield on the short-term 2-year too traded 2 basis points higher at 1.598 percent.

The United Kingdom’s gilts jumped during European trading hours ahead of the country’s employment report for the month of August and the 10-year auction, both scheduled for October 15 by 08:30GMT and 09:45GMT respectively. The yield on the benchmark 10-year gilts, plunged nearly 9-1/2 basis points to 0.615 percent, the 30-year yield slumped 8 basis points to 1.092 percent and the yield on the short-term 2-year lost nearly 7 basis points to 0.484 percent.

The German bunds remained mixed during European session of the first trading day of the week ahead of the country’s ZEW economic sentiment index for the month of October, scheduled to be released on October 15 by 09:00GMT and the eurozone’s consumer price inflation (CPI) for the month of September, due for release on October 16 by 09:00GMT for further direction in the debt market. The German 10-year bond yield, which move inversely to its price, slumped 2-1/2 basis points to -0.465 percent, the yield on 30-year note plunged 5 basis points to -0.032 percent while the yield on short-term 2-year gained 2 basis points to -0.702 percent.

The Australian government bonds plunged during Asian trading session as investors await the Reserve Bank of Australia’s (RBA) September monetary policy meeting minutes, scheduled to be released on October 15 by 00:30GMT and the country’s employment report, due for release on the following day for further direction in the debt market. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped 3-1/2 basis points to 1.050 percent, the yield on the long-term 30-year bond surged nearly 2-1/2 basis points to 1.636 percent and the yield on short-term 2-year remained 2 basis points higher at 0.724 percent.   

By Lactus Fernandes
  • Market Data
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