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Europe Roundup: Sterling gains on Brexit deal hopes, greenback eases amid global growth uncertainty concerns, European shares edge higher - Monday, November 19th, 2018

Market Roundup

  • Eurozone Sep 2018 construction output mm increase to 2.04 % vs previous -0.55 % (revised from -0.46 %)
     
  • Eurozone Sep 2018 current account NSA,eur increase to 24.1 eur vs previous 20.9 eur (revised from 20.5 eur)
     
  • Eurozone Sep 2018 current account SA, eur decrease to 16.9 eur vs previous 24.3 eur (revised from 23.9 eur)
     
  • Eurozone Sep 2018 current account SA, eur decrease to 17 eur vs previous 23.9 eur
     
  • ECB's Nouy says 25 banks "well advanced" in talks to relocate to eurozone post Brexit
     
  • ECB's Nouy says Italian spread-widening "unwelcome" but it's not the last time we face this kind of scenario
     
  • ECB’s Villeroy says no-deal Brexit would be ‘detrimental’ for British economy but impact limited for euro GDP growth
     
  • ECB's Villeroy says Europe is prepared if there is a no-deal Brexit
     

Economic Data Ahead

  • (1000 ET/1500 GMT) The National Association of Home Builders (NAHB) is expected to report that the U.S. Housing Market Index rose to 68 in November, having posted a similar increase in October.

Key Events Ahead

  • (0830 ET/1330 GMT) Europe's Economic Commissioner Pierre Moscovici holds a news conference at the EU Commission's headquarters in Rome.
     
  • (0900 ET/1400 GMT) Norway Central Bank Deputy Governor Jon Nicolaisen gives a speech at a conference hosted by the Federation of Norwegian Industries in Oslo.
     
  • (1045 ET/1545 GMT) New York Fed President John Williams participates in moderated discussion with the NYC Hispanic Chamber of Commerce in New York.
     

FX Beat

DXY: The dollar index slumped to an 11-day trough on growing view that U.S. economic growth may have peaked and will start to ease in near-term. The greenback against a basket of currencies trades 0.1 percent down at 96.35, having touched a low of 96.32 earlier, its lowest since Nov 8. FxWirePro's Hourly Dollar Strength Index stood at -16.23 (Neutral) by 1100 GMT.

EUR/USD: The euro rallied to an 11-day peak after European Central Bank policymaker Francois Villeroy de Galhau stated that no-deal Brexit would be detrimental for the British economy but limited impact on the Eurozone GDP growth. The European currency traded 0.1 percent up at 1.1423, having touched a high of 1.1429, its highest since Nov. 8. FxWirePro's Hourly Euro Strength Index stood at 37.81 (Neutral) by 1100 GMT. Immediate resistance is located at 1.1446 (November 8 High), a break above targets 1.1499 (November 7 High). On the downside, support is seen at 1.1351 (November 8 Low), a break below could drag it till 1.1302 (October 31 Low)

USD/JPY: The dollar tumbled to an over 2-week low as investors turned cautious following dovish comments by Federal Reserve policymakers. Moreover, conflicting signals of a potential agreement in the U.S.-China trade dispute weighed on investor sentiment. The major was trading 0.1 percent down at 112.76, having hit a low of 112.61, its lowest since November 2. FxWirePro's Hourly Yen Strength Index stood at -17.05 (Neutral) by 1100 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. housing market index and FOMC member Williams’s speech. Immediate resistance is located at 113.00 (November 1 High), a break above targets 113.50 (November 6 High). On the downside, support is seen at 112.56 (November 2 Low), a break below could take it lower 112.35 (October 22 Low).

GBP/USD: Sterling rallied, extending previous session rebound as British Prime Minister Theresa May sought to win support from business leaders for her draft European Union separation deal. The major traded 0.4 percent up at 1.2869, having hit a low of 1.2723 on Thursday; it’s lowest since October 31. FxWirePro's Hourly Sterling Strength Index stood at -94.38 (Slightly Bearish) 1100 GMT.  Immediate resistance is located at 1.2919 (October 25 High), a break above could take it near 1.2946 (November 12 High). On the downside, support is seen at 1.2776 (October 26 Low), a break below targets 1.2723 (November 14 Low). Against the euro, the pound was trading 0.2 percent up at 88.76 pence, having hit a low of 89.05 on Friday, it’s lowest since October 31.

USD/CHF: The Swiss franc surged to a 12-day peak on the Federal Reserve's concerns over the global economy and the U.S.-China trade dispute. The major trades 0.3 percent down at 0.9968, having touched a low of 0.9958 earlier; it’s lowest since Nov. 7. FxWirePro's Hourly Swiss Franc Strength Index stood at 135.35 (Highly Bullish) by 1100 GMT. On the higher side, near-term resistance is around 1.0050 (Nov. 7 High) and any break above will take the pair to next level till 1.0128 (Nov. 13 High). The near-term support is around 0.9937 (September 23 Low) and any close below that level will drag it till 0.9897 (October 17 Low).

Equities Recap

European shares advanced as signs of an easing in U.S.-China trade tensions supported mining and technology stocks, while sterling gained on Brexit deal expectations.

The pan-European STOXX 600 index rallied 0.2 percent at 358.36 points, while the FTSEurofirst 300 index surged 0.2 percent to 1,411.43 points.

Britain's FTSE 100 trades 0.3 percent up at 7,036.99 points, while mid-cap FTSE 250 gained 0.5 percent to 18,680.71 points.

Germany's DAX fell 0.1 percent at 11,335.68 points; France's CAC 40 trades 0.1 percent lower at 5,021.82 points.

Commodities Recap

Crude oil prices gained for a fourth consecutive session, boosted by the prospect that Saudi Arabia will push OPEC and maybe Russia to cut supply towards the end of this year. International benchmark Brent crude was trading 0.2 percent up at $67.05 per barrel by 1053 GMT, having hit a low of $65.20 on Tuesday, its lowest since mid- March. U.S. West Texas Intermediate was trading 0.4 percent up at $56.95 a barrel, after falling as low as $54.79 on Tuesday, its lowest since Nov. 2017.

Gold prices surged, hovering towards a 1-week peak hit in the previous session as the dollar remain subdued on Federal Reserve's concerns over the global economy. Spot gold was 0.1 percent up at $1,221.92 per ounce by 1053 GMT, having hit a high of $1225.17 on Friday, its highest since Nov. 8. U.S. gold futures were down 0.3 percent at $1,219.6 per ounce.

Treasuries Recap

The U.S. Treasuries fell during late afternoon session ahead of today’s speech from FOMC member Williams amid an otherwise, silent trading day. The yield on the benchmark 10-year Treasuries rose nearly 1-1/2 basis points to 3.087 percent, the super-long 30-year bond yields climbed 2 basis points to 3.347 percent and the yield on the short-term 2-year remained nearly 1-1/2 basis points higher at 2.825 percent.

The United Kingdom’s gilts traded narrowly mixed during the afternoon session amid a silent trading day that witnessed data of little economic significance. The yield on the benchmark 10-year gilts, remained tad higher at 1.418 percent, the super-long 30-year bond yields hovered around 1.959 percent and the yield on the short-term 2-year traded tad lower at 0.722 percent.

The German bunds traded lower during afternoon session ahead of the country’s 5-year auction, scheduled to be held on November 21 by 10:40GMT and the European Central Bank’s (ECB) account of the monetary policy meeting, due on the following day by 12:30GMT. The German 10-year bond yields, which move inversely to its price, surged nearly 2-1/2 basis points to 0.396 percent, the yield on 30-year note also climbed 2-1/2 basis points to 1.061 percent and the yield on short-term 2-year traded 1-1/2 basis points higher at -0.635 percent.

The Japanese government bonds remained higher on the first trading day of the week, following a worse-than-expected trade balance data for the month of October, released late yesterday. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 1-1/2 basis points to 0.095 percent, the yield on the long-term 30-year note fell 1 basis point to 0.852 percent while the yield on short-term 2-year remained tad lower at -0.144 percent

The Australian government bonds gained across the curve during Asian session amid global equity sell-off. Sentiment deteriorated earlier on dovish comments from Federal Reserve Vice Chair Clarida. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 3 basis points to 2.662 percent, the yield on the long-term 30-year bond dipped 2 basis points to 3.187 percent and the yield on short-term 2-year down 1-1/2 basis points to 2.050 percent.

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