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Europe Roundup: Sterling gains on BoE rate hike speculation, euro rebounds on better-than-expected economic data, European shares ease – Monday, October 30th, 2017


Market Roundup

  • EUR/USD 0.22%, USD/JPY -0.08%, GBP/USD 0.3%, EUR/GBP -0.06%
     
  • DXY -0.28%, DAX 0.07%, FTSE -0.2%, Brent 0.1%, Gold -0.09%
     
  • Germany Sept Retail Sales YY Real 4.1% vs 2.8%, forecast 3.0%, revised 3.0%
     
  • Great Britain Sept BOE Consumer Credit 1.606B vs 1.583B, forecast 1.500B, revised 1.760B
     
  • Great Britain Sept Mortgage Approvals 66.232k vs 66.580k, forecast 66.050k, revised 67.232k
     
  • EZ Oct Business Climate 1.44 vs 1.34, forecast 1.41
     
  • EZ Oct Economic Sentiment 114.0 vs 113.0, forecast 113.4, revised 113.1
     
  • EZ Oct Industrial Sentiment 7.9 vs 6.6, forecast 7.1, revised 6.7
     
  • EZ Oct Services Sentiment 16.2 vs 15.3, forecast 15.4, revised 15.4
     
  • EZ Oct Consumer Confid. Final -1.0 vs -1.0, forecast -1.0
     
  • German parties resume coalition talks after "change of atmosphere"
     
  • Spain's control over Catalonia to be tested on Monday as work resumes
     

Economic Data Ahead

  • (0830 ET/1230 GMT)  The U.S. Commerce Department releases personal income figures for September, which is expected to rise 0.4 percent, having gained 0.2 percent in the previous month.
     
  • (0830 ET/1230 GMT) The U.S. Commerce Department releases the personal consumption expenditures (PCE) price index for the month of September. The index rose 0.2 percent in the prior month, while core PCE is likely to have increased 0.2 percent in August after edging up 0.1 percent in the previous month.
     
  • (0830 ET/1230 GMT) The U.S. Personal spending is likely to rise 0.7 percent in the month of September after edging up 0.1 percent in August.
     
  • (0800 ET/1200 GMT) Germany reports its preliminary consumer price index for the month of October. The index is expected to edge up 0.1 percent, after posting similar gains in the previous month.
     
  • (1030 ET/1430 GMT) The Dallas Fed releases its Manufacturing Business Index for the month of October. The index rose to 21.3 percent in the previous month.
     
  • N/A The Federal Reserve releases its Loan Officer Survey.
     
  • (1745 ET/2145 GMT) The Statistics New Zealand releases building permits seasonally adjusted data for the month of September. The index posted a rise of 10.2 percent in August.
     
  • (1930 ET/2330 GMT) Japan's Statistics Bureau is expected to report that unemployment rate remained unchanged at 2.8 percent for the month of September.
     
  • (1930 ET/2330 GMT) Japan's overall household spending probably rose at an annualized rate of 0.7 percent in September after rising 0.6 percent in August. 
     
  • (1950 ET/2350 GMT) Japan's Ministry of Economy, Trade, and Industry will release preliminary Industrial Production for the month of September. The indicator posted a final reading of 5.3 percent in the prior month.
     

Key Events Ahead

  • (1145 ET/1545 GMT) FedTrade Operation 30-year Ginnie Mae (max $1.230 bn)

FX Beat

DXY: The dollar index eased following a sharp retracement in the U.S. Treasury bond yields. The greenback against a basket of currencies traded 0.2 percent down at 94.67, having touched a high of 95.15 on Friday, its highest since July. 20. FxWirePro's Hourly Dollar Strength Index stood at 67.65 (Bullish) by 1100 GMT.

EUR/USD: The euro rose, reversing most of its previous session losses after data showed Eurozone economic sentiment rose by more than expected in October and hit its highest level since 2000. The sentiment in the eurozone rose to 114.0 in October from an upwardly revised 113.1 in September. The European currency traded 0.3 percent up at 1.1636, having touched a low of 1.1574 on Friday, its lowest since Jul. 20. FxWirePro's Hourly Euro Strength Index stood at -123.03 (Highly Bearish) by 1100 GMT.  On the lower side, the near term support is around 1.15450 (161.8% retracement of 1.16691 and 1.1880) and any convincing break below will drag the pair down till 1.1500/1.1400.  On the higher side, near-term resistance is around 1.16486 (23.6% retracement of 1.1880 and 1.15716) and any break above will take it to next level till 1.1700/1.1720/1.17560.

USD/JPY: The dollar eased, extending previous session losses, weighed down by a sharp retracement in the U.S. Treasury bond yields and the prevalent cautious environment around equity markets. The major was trading 0.05 percent down at 113.56, having hit a high of 114.45 on Friday, its highest since Jul. 11. FxWirePro's Hourly Yen Strength Index stood at 122.47 (Highly Bullish) by 1100 GMT. On the lower side, any close below 112.30 (233- day MA) confirms minor weakness, a decline till 111.60 (55- day EMA)/ 111.13 likely. Any convincing close above 114.50 (161.8% fibo) confirms minor bullishness, a jump till 116 likely.

GBP/USD: Sterling rallied, rebounding from a 3-month low hit in the previous session as Britain's housing market and consumer economy kept most of their momentum in September. The economy’s number of mortgages approved for house purchase declined to a three-month low in September at 66,232 from an upwardly revised 67,232 in August, while the growth rate in unsecured consumer lending edged down to 9.9 percent on a year-on-year basis in September from 10.0 percent in August. Sterling traded 0.4 percent up at 1.3178, having hit a low of 1.3070 on Friday, its lowest since Oct. 6. FxWirePro's Hourly Sterling Strength Index stood at 36.40 (Neutral) by 1100 GMT.  The pair has taken support near 38.2% retracement at 1.3075 and any violation below will take it till 1.30270 likely. On the higher side, near-term resistance is around 1.3172 (55- day EMA) and any break above will take it to next level till 1.3230/1.3300. Against the euro, the pound was trading 0.1 percent down at 88.27 pence, having hit a high of 88.25 pence on Friday, its highest since Oct. 3.

USD/CHF: The Swiss franc steadied near a 5-month low, as the greenback declined on profit-taking ahead of FOMC monetary policy decision this week. The major trades flat at 0.9976, having touched a high of 1.0037 the day before, it’s highest since May. 12. FxWirePro's Hourly Swiss Franc Strength Index stood at -48.72 (Neutral) by 1100 GMT. The pair is facing strong resistance is around 1.000 and any break above will take it to next level till 1.00998/1.0174. The near-term major support is around 0.9950 and any break below will drag it till 0.9900/0.9865 (233-day MA).

AUD/USD: The Australian dollar declined, reversing previous session gains as weaker sentiment around commodity space and political developments continued to weigh heavily on the major. The Aussie trades 0.1 percent down at 0.7667, having hit a low of 0.7624 on Friday, it’s lowest since Jul. 11. FxWirePro's Hourly Aussie Strength Index stood at -66.20 (Bearish) by 1100 GMT. On the lower side, the pair should close below 0.7645 (233 –day MA) and any close below targets 0.7600/0.7550. The near-term resistance is around 0.7720 (23.6% fibo) and any break above targets 0.7758 (7- day MA)/0.7801 (21 – day EMA)/0.7860/0.7900/0.7950/0.8000.

Equities Recap

European shares declined, despite a recovery in Spanish markets, while greenback tumbled following a sharp drop in the U.S. Treasury bond yields.

The pan-European STOXX 600 index eased 0.1 percent to 393.16 points, while the FTSEurofirst 300 index declined 0.1 percent to 1,545.33 points.

Britain's FTSE 100 trades 0.3 percent lower at 7,485.18 points, while mid-cap FTSE 250 rose 0.2 percent to 20,176.47 points.

Germany's DAX rose 0.05 percent at 13,224.67 points; France's CAC 40 trades 0.05 percent up at 5,495.74 points.

Commodities Recap

Crude oil markets gained on expectations that an OPEC-led production cut due to expire next March would be extended, however, increasing exports from Iraq capped the upside in prices. International benchmark Brent crude was trading 0.1 percent up at $60.55 per barrel by 1104 GMT, having hit a high of $60.86 earlier, its highest since Jul. 6. U.S. West Texas Intermediate was trading 0.2 percent lower at $53.94 a barrel, after rising as high as $54.61 on Friday, its highest since Mar. 1.

Gold prices declined as investors remained cautious ahead of policy meetings of the Federal Open Market Committee (FOMC) and central banks of England and Japan this week. Spot gold dipped 0.1 percent to $1,271.25 per ounce at 1104 GMT, having touched its lowest since Oct. 6 at $1263.39 on Friday. U.S. gold futures for December delivery were down 0.1 percent, to $1,270.10.

Treasuries Recap

The U.S. Treasuries jumped on rising bets over the appointment of Federal Reserve Governor Jerome Powell as the next Fed Chair after Janet Yellen’s term ends in February 2018. The yield on the benchmark 10-year Treasury slumped 3 basis points to 2.39 percent, the super-long 30-year bond yields plunged nearly 2-1/2 basis points to 2.91 percent and the yield on short-term 2-year note traded 1 basis point lower at 1.59 percent.

The UK gilts remained tad higher as investors wait to watch the Bank of England’s monetary policy decision, scheduled to be unveiled on November 2. The yield on the benchmark 10-year gilts, fell nearly 1 basis point to 1.34 percent, the super-long 30-year bond yields hovered around 1.91 percent and the yield on the short-term 2-year traded 1 basis point lower at 0.45 percent.

The German bunds traded narrowly mixed after the country’s retail sales for the month of September disappointed market participants, although registered higher figures than that in August. The German 10-year bond yields, which move inversely to its price, traded flat at 0.38 percent, the yield on 30-year note slid nearly 1 basis point to 1.27 percent while the yield on short-term 2-year jumped nearly 2 basis points to -0.74 percent.

The New Zealand long-term bonds ended flat as investors remained sidelined in any major trading activity amid lack of sufficient economic data through the day. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, remained flat at 3.00 percent, the yield on the 20-year note rose 1/2 basis point to 3.55 percent while the yield on short-term 2-year slumped 4-1/2 basis points to 2.03 percent.

The Japanese bonds traded a little higher as investors awaited the Bank of Japan’s second last two-day monetary policy meeting scheduled to be held October 30-31. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell nearly 1 basis point to 0.065 percent, the yield on long-term 30-year declined nearly ½ basis point to 0.873 percent and the yield on short-term 2-year slid ½ basis points to -0.153 percent.

The Australian bonds gained following firmness in the U.S. Treasuries as speculations increased over the appointment of less hawkish Federal Reserve Governor Jerome Powell. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 6-1/2 basis points to 2.726 percent, the yield on the long-term 30-year note also declined 7 basis points to 3.490 percent and the yield on short-term 2-year slid 3 basis points to 1.854 percent.

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November 24 15:30 UTC Released

USECRI Weekly Index*

Actual

145.6 %

Forecast

Previous

145.6 %

November 24 14:45 UTC Released

US1st Half-Mth Infl YY*

Actual

54.6 %

Forecast

Previous

54.6 %

November 27 09:00 UTC 35263526m

ITExport Prices*

Actual

Forecast

Previous

111 %

November 27 09:00 UTC 35263526m

ITImport Prices*

Actual

Forecast

Previous

116.1 %

November 27 14:00 UTC 38263826m

MXTrade Balance, $*

Actual

Forecast

Previous

-1.886 Bln USD

November 27 14:00 UTC 38263826m

MXTrade Balance SA*

Actual

Forecast

Previous

-1.559 Bln USD

November 27 15:30 UTC 39163916m

USDallas Fed mfg bus index

Actual

Forecast

Previous

27.6

November 27 21:00 UTC 42464246m

KRBOK Manufacturing BSI*

Actual

Forecast

Previous

87 Bln BRL

November 28 00:00 UTC 44264426m

BRCentral Govt Balance

Actual

Forecast

Previous

-22.725 Bln BRL

November 28 07:00 UTC 48464846m

DEGDP Growth QQ* Advance

Actual

Forecast

Previous

10.7 %

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