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Europe Roundup: Sterling eases on downbeat economic data, dollar index at 1-week peak ahead of Fed Yellen's speech, European shares rebound - Tuesday, November 21st, 2017

Market Roundup

  • EUR/USD 0.05%, USD/JPY -0.11%, GBP/USD -0.06%, EUR/GBP 0.12%
     
  • DXY -0.04%, DAX 0.48%, FTSE 0.22%, Brent 0.32%, Gold 0.27%
     
  • Bank of England rate-setters air differences over rate hike
     
  • UK factories enjoy best month for new orders since 1988 - CBI
     
  • UK borrowing grows in October, underscoring budget headache for Hammond
  • NAFTA nations lock horns on U.S. auto demands as fifth round ends
  • China to step up property market regulation to avoid bubble risk
     
  • Japan may cut CPI, growth estimates in midterm report - sources
     
  • Great Britain PSNB Ex Banks GBP Oct, 8.040B, 7.0B forecast, 5.902B previous
     
  • Great Britain PSNB, MM GBP Oct, 7.464B, 6.600B forecast, 5.326B previous
     
  • Great Britain PSNCR, MM GBP Oct, -3.773B, 11.205B previous
     
  • French-German bond yield spread returns to pre-crisis levels
  • Oil rises ahead of OPEC meeting as further output cuts expected
  • Gold edges higher, Fed minutes in focus

Economic Data Ahead                   

  • (0830 ET/1330 GMT) The Federal Reserve Bank of Chicago will release its Chicago Fed National Activity Index (CFNAI) for the month of October. The index stood at 0.17 in the prior month.
  • (0830 ET/1330 GMT) Statistics Canada will release its wholesale trade figures for the month of September. The indicator is likely to have increased by 0.3 percent, after unexpectedly rising 0.5 percent in August.
     
  • (1000 ET/1500 GMT) National Association of Realtors is likely to report that U.S. existing home sales increased 0.7 percent to 5.43 million units in October, compared with 5.39million units in the previous month.
     
  • (1630 ET/2030 GMT) API reports its weekly crude oil stock
     
  • (1645 ET/2145 GMT) The Statistics New Zealand will release visitor arrivals report for the month of October. The indicator posted an annualized gain of 3.1 percent in the prior month.
  • (1830 ET/2330 GMT) The Melbourne Institute will release Australia's Westpac Leading Index for the month of October. The index edged up 0.1 percent in the previous month.

Key Events Ahead

  • (1000 ET/1500 GMT) European Central Bank Executive Board memeber Benoît Cœuré chairs a ECB Conference in Frankfurt.
     
  • (1145 ET/1545 GMT) FedTrade Operation 15-year Fannie Mae / Freddie Mac (max $520 mn)
     
  • (1800 ET/2300 GMT) Federal Reserve Chair Janet Yellen is scheduled to participate in a moderated discussion, "In Conversation with Mervyn King," at the New York University Stern School of Business.
     

FX Beat

DXY: The dollar index rallied to a 1-week high ahead of the current Fed Chair Janet Yellen's scheduled speech. The greenback against a basket of currencies traded 0.1 percent up at 94.11, having touched a high of 94.17 earlier, its highest since Nov. 14. FxWirePro's Hourly Dollar Strength Index stood at 7.26 (Neutral) by 1000 GMT.

EUR/USD: The euro steadied after falling to a 1-week low earlier in the day, as investors shrugged off concerns of any fallout from the German political deadlock for now. The European currency traded 0.1 percent up at 1.1737, having touched a low of 1.1722 the day before, its lowest since Nov. 14. FxWirePro's Hourly Euro Strength Index stood at -149.33 (Highly Bearish) by 1000 GMT. The near-term resistance is around 1.1760 and any break above will take the pair to next level till 1.1800/1.1825.  On the lower side, major support is around 1.17000 and any break below will drag it to next level till 1.1660/1.1600/1.1553 (Nov 7th, 2017 low).

USD/JPY: The dollar eased against the Japanese yen as investors cautiously awaited the minutes from the U.S. Federal Reserve's last meeting for clues on the outlook for potential rate hikes. The major was trading 0.1 percent down at 112.48, having hit a low of 111.88 the day before, its lowest since Oct. 16. FxWirePro's Hourly Yen Strength Index stood at 91.82 (Slightly Bullish) by 1000 GMT. On the lower side, any close below 111. 72 (100- day MA) confirms minor weakness, a decline till 111.13/110 likely. Any convincing close above 113.36 (61.8% fib) confirms minor bullishness, a jump till 114/114.73 likely.

GBP/USD: Sterling trimmed early session gains and turned lower after data showed Britain's budget gap unexpectedly widened in October. Moreover, divergent monetary policy outlooks between the Fed and BoE continued to dampen the bid tone around the British currency. The major traded 0.1 percent down at 1.3210, having hit a high of 1.3279 on Monday, it’s highest since Nov. 2. FxWirePro's Hourly Sterling Strength Index stood at 67.92 (Bullish) by 1000 GMT.  Any break above 1.3380 will take the pair to next level till 1.3400/1.3500. On the lower side, near-term support is around 1.31750 and any break below will drag it to next level till 1.3130/1.3100/1.3060/1.30270. Against the euro, the pound was trading 0.1 percent up at 88.72 pence, having hit a high of 88.43 pence earlier, it’s highest since Nov. 13.

USD/CHF: The Swiss franc consolidated within a narrow range as the greenback steadied ahead of the Federal Reserve Chair Janet Yellen's speech later in the day. The major trades flat at 0.9933, having touched a low of 0.9846 on Wednesday, it’s lowest since Oct. 24. FxWirePro's Hourly Swiss Franc Strength Index stood at 6.17 (Neutral) by 1000 GMT. The near-term support is around 0.9875 (34- day EMA) and any convincing break below will drag the pair to next level till 0.9845 (233- day MA)/0.9805 (38.2% retracement of 0.9420 and 1.00390)/0.9770. The major resistance is around 0.9950 (20- day MA) and any break above will take it to next level till 0.9980/1.000/1.0040.

AUD/USD: The Australian dollar rebounded after slumping to 5-month lows earlier in the session on the back of the RBA’s latest policy meeting minutes, which highlighted concerns on sluggish wages and cemented views that interest rates will stay at record lows in near term. The Aussie trades 0.4 percent up at 0.7576, having hit a low of 0.7532; it’s lowest since Jun. 14. FxWirePro's Hourly Aussie Strength Index stood at 41.36 (Neutral) by 1000 GMT. On the lower side, the pair’s near-term support is around 0.7530 and any broke below will drag the pair till 0.7500/0.7435. The near-term resistance is around 0.7600 (7- day MA) and any break above targets 0.7650/0.7680/0.7730/0.7780.

Equities Recap

European shares advanced, recovering early session losses, while the dollar index rallied to a 1-week high ahead of the current Federal Reserve Chair Janet Yellen's speech.

The pan-European STOXX 600 index rallied 0.3 percent to 387.34 points, while the FTSEurofirst 300 index gained 0.3 percent to 1,523.29 points.

Britain's FTSE 100 trades 0.2 percent higher at 7,404.67 points, while mid-cap FTSE 250 rose 0.01 percent to 19,871.08 points.

Germany's DAX rallied 0.5 percent at 13,126.57 points; France's CAC 40 trades 0.5 percent up at 5,364.28 points.

Commodities Recap

Crude oil prices rose, reversing most of the previous session losses, as traders looked to a meeting next week at which major crude exporters are expected to extend production cuts. International benchmark Brent crude was trading 0.9 percent up at $62.65 per barrel by 1027 GMT, having hit a low of $61.06 on Friday, its lowest since Nov. 3. U.S. West Texas Intermediate was trading 0.6 percent up at $56.73 a barrel, after falling as low as $54.87 last week, its lowest since Nov. 3.

Gold prices inched higher as the greenback consolidated, while the investors awaited the minutes from the U.S. Federal Reserve's last meeting for clues on the outlook for potential rate hikes. Spot gold was 0.4 percent up at $1,280.19 per ounce by 1029 GMT, having slumped about 1.4 percent on Monday in its biggest one-day percentage drop since Sept. 11. U.S. gold futures for December delivery gained 0.4 percent to $1,280.10.

Treasuries Recap

The U.S. Treasuries remained mixed as investors are now waiting to watch the Federal Reserve Chair Janet Yellen deliver a speech scheduled for today by 23:00GMT. The yield on the benchmark 10-year Treasuries slipped 1-1/2 basis points to 2.35 percent, the super-long 30-year bond yields slumped 3 basis points to 2.76 percent and the yield on short-term 2-year note traded nearly 1 basis point lower at 1.76 percent.

The German bunds jumped as investors wait to watch the country’s 30-year auction, due on November 22 by 10:35GMT. The German 10-year bond yields, which move inversely to its price, slumped 2 basis points to 0.34 percent, the yield on 30-year note plunged 4 basis points to 1.19 percent and the yield on short-term 2-year traded 1-1/2 basis points lower at -0.72 percent.

The New Zealand bonds closed narrowly mixed as investors awaited Global Dairy Trade (GDT) auction scheduled to be held today. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.840 percent, the yield on 20-year note also dipped 1 basis point to 3.410 percent and the yield on short-term 2-year ended 1/2 basis points higher at 2.000 percent.

The Japanese bonds traded a tad higher as investors remained sidelined in any major deal ahead of the Thanksgiving Day holiday. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1/2 basis point to 0.034 percent, the yield on long-term 40-year also declined 1/2 basis point to 0.980 percent and the yield on short-term 2-year remained nearly steady at -0.195 percent.

The Australian government bonds remained little lower on Tuesday as the Reserve Bank of Australia (RBA) November monetary policy meeting minutes provided no surprises to the market. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1-1/2 basis points to 2.570 percent, the yield on the long-term 30-year note climbed 2-1/2 basis points to 3.349 percent and the yield on short-term 2-year rose 1/2 basis point to 1.783 percent.

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