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Europe Roundup: Sterling gains on Brexit deal hopes, greenback eases amid holiday-thinned trading, European shares consolidate near 4-month peaks - Monday, February 18th, 2019

Market Roundup

  • UK PM May's spokesman says we are certain of our sovereignty over Gibraltar
  • UK PM May's spokesman says UK still wants to reopen Brexit withdrawal agreement
  • UK PM May's spokesman says, on Gibraltar, there was no incursion
  • EU commission says EU would react swiftly if U.S. applied tariffs to EU car imports
  • EU commission says EU will stick to its word as long as U.S. Does the same
  • EU commission says committed to positive trade agenda with U.S. Has delivered
  • UK lawmaker Berger says we will now sit in parliament as an independent group of MPS
  • Lawmaker Luciana Berger says we have all now resigned from the Labour party

Economic Data Ahead

  • No major economic data releases

Key Events Ahead

  • (1115 ET/1615 GMT) ECB Supervisor Andrea Enria participates in a panel discussion at an event in Brussels

FX Beat

DXY: The dollar index eased after the U.S. Commerce Department sent a report to President Donald Trump that could unleash steep tariffs on imported cars and auto parts.  The greenback against a basket of currencies trades 0.2 percent down at 96.69, having touched a high of 97.37 the session before, its highest since December 17. FxWirePro's Hourly Dollar Strength Index stood at -118.16 (Highly Bearish) by 1000 GMT.

EUR/USD: The euro bounced back from a 3-month low touched in the previous session after European Central Bank board member Benoit Coeure said a new round of cheap multi-year loans to banks was possible. The European currency traded 0.3 percent up at 1.1322, having touched a low of 1.1234 on Friday, its lowest since Nov. 13. FxWirePro's Hourly Euro Strength Index stood at 54.76 (Bullish) by 1000 GMT. Immediate resistance is located at 1.1341 (Feb. 13 High), a break above targets 1.1368 (Feb.7 High).. On the downside, support is seen at 1.1216 (Nov. 13 Low), a break below could drag it till 1.1180.

USD/JPY: The dollar gained against the Japanese yen as optimism over a breakthrough in U.S.-China trade war talks boosted investor sentiment. However, fading expectations for interest rate rises by the United States Federal Reserve this year limited the upside. The major was trading 0.1 percent up at 110.53, having hit a high of 111.12 on Thursday, its highest since December 27. FxWirePro's Hourly Yen Strength Index stood at -46.60 (Neutral) by 1000 GMT. Immediate resistance is located at 111.05 (Feb. 13 Low), a break above targets 111.40 (Dec. 26 Low). On the downside, support is seen at 110.25 (10-DMA), a break below could take it lower at 109.60 (Feb. 7 Low).

GBP/USD: Sterling rallied to a 5-day peak, as investors await the outcome of Brexit talks between Britain and the European Union. British Prime Minister Theresa May will speak to every EU leader and the European Commission chief to seek changes to her EU withdrawal agreement. The major traded 0.4 percent up at 1.2934, having hit a low of 1.2772 on Thursday; it’s lowest since January 15. FxWirePro's Hourly Sterling Strength Index stood at 44.94 (Neutral) 1000 GMT. Immediate resistance is located at 1.2958 (Feb. 18 High), a break above could take it near 1.2996 (February 7 High). On the downside, support is seen at 1.2845 (Feb 11 Low), a break below targets 1.2766 (Nov 22 Low). Against the euro, the pound was trading flat at 87.58 pence, having hit a high of 87.42, it’s highest since Feb. 8.

USD/CHF: The Swiss franc surged to a 1-week peak as the greenback weakened after the U.S. agency submitted auto tariff probe report to the White House. The major trades 0.2 percent down at 1.0031, having touched a low of 1.0028; it’s lowest since February 11. FxWirePro's Hourly Swiss Franc Strength Index stood at 24.27 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 1.0111 (November 12 High) and any break above will take the pair to next level till 1.0150. The near-term support is around 0.9961 (January 22 Low), and any close below that level will drag it till 0.9889 (December 7 Low).

Equities Recap

European shares consolidated near 4-month peaks, as investors refrained from taking big positions ahead of further U.S.-China trade talks in Washington this week.

The pan-European STOXX 600 index gained 0.05 percent at 368.82 points, while the FTSEurofirst 300 index surged 0.1 percent to 1,453.32 points.

Britain's FTSE 100 trades 0.2 percent down at 7,224.16 points, while mid-cap FTSE 250 rose 0.4 to 19,070.22 points.

Germany's DAX rose 0.3 percent at 11,263.70 points; France's CAC 40 trades 0.05 percent lower at 5,151.33 points

Commodities Recap

Crude oil prices declined after rising to their highest levels since November last year as China's automobile sales fell for a seventh straight month in January, raising concerns about fuel demand in the world's second-largest oil consumer. International benchmark Brent crude was trading 0.4 percent down at $65.97 per barrel by 0513 GMT, having hit a high of $66.81 earlier, its highest since November 20. U.S. West Texas Intermediate was trading 0.1 percent higher at $55.79 a barrel, after rising as high as $56.24, its highest since the November 20.

Gold prices rallied to their highest level in more than 2-weeks as the dollar weakened on hopes the United States and China are nearing a trade deal. Spot gold gained 0.2 percent to $1,324.31 per ounce by 1023 GMT, having touched a high of $1,325.21 earlier, its highest level since January 31. U.S. gold futures rose 0.3 percent to $1,326.1 an ounce.

Treasuries Recap

The German 10-year government bond held near to 0.10 percent, having declined as low as 0.07 percent at the end of January. The Italian 10-year bond yield fell to 2.775 percent, while Spainish 10-year government bond yield was also down one basis point to 1.234 percent. The Portuguese 10-year government bond yields hit near four year lows at 1.563 pct.

The Japanese government bond prices were steady, with the benchmark 10-year JGB futures edging near their 2-1/2-year high touched last month. The benchmark 10-year JGB futures rose 0.06 point to 152.89. The benchmark 10-year cash JGB yield fell 0.5 basis point to minus 0.03 percent. The five-year JGB yield dropped 0.5 basis point to -0.175 percent. The 30-year JGB yield and the 40-year JGB yield were at 0.590 percent and 0.665 percent respectively.

The Australian government bond futures slipped, with the three-year bond contract off 2.5 ticks at 98.32. The 10-year contract fell 3 ticks to 97.87.

The New Zealand government bonds eased, sending yields 1-2 basis points higher at the long-end.

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