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Europe Roundup: Sterling gains on better-than-expected GDP figures, euro rallies as dollar weakens on U.S. officials’ comments, European shares rally - Friday, January 26th, 2018

Market Roundup

  • United Kingdom Q4 GDP prelim yy decrease to 1.5 % (forecast 1.4 %) vs previous 1.7 %
     
  • United Kingdom Q4 GDP prelim qq increase to 0.5 % (forecast 0.4 %) vs previous 0.4 %
     
  • Eurozone Dec loans to non-fin decrease to 2.9 % vs previous 3.1 %
     
  • Eurozone Dec loans to households stays flat at 2.8 % vs previous 2.8 %
     
  • Eurozone Dec money-m3 annual growth decrease to 4.6 % (forecast 4.9 %) vs previous 4.9 %
     
  • France Jan business climate increase to 113 (forecast 112 ) vs previous 112
     
  • France Jan consumer confidence decrease to 104 (forecast 106 ) vs previous 105
     

Economic Data Ahead

  • (0830 ET/1330 GMT) The U.S. Commerce Department is expected to report that preliminary gross domestic product increased at a 3.0 percent annual rate in the fourth quarter after surging at a 3.2 percent pace in the third quarter.
     
  • (0830 ET/1330 GMT) The U.S. Census Bureau is likely to report that preliminary wholesale inventories rose 0.2 percent in December after posting a gain of 0.8 percent in November.
     
  • (0830 ET/1330 GMT) The United States releases goods trade balance data for the month of December. The economy recorded a trade deficit of $70.0 billion in the previous month.
     
  • (0830 ET/1330 GMT) The U.S. durable goods orders are expected to have increased 0.8 percent in December after rising 1.3 percent in November, while non-defense capital goods orders excluding aircraft are likely to have risen 0.5 percent after declining 0.2 percent in November.
     
  • (0830 ET/1330 GMT) The Statistics Canada is expected to report that annual inflation rate eased to 1.9 percent in December, from 2.1 percent in November, still closer to the Bank of Canada’s 2 percent target. While core consumer price index is likely rose to 1.5 percent from previous 1.3 percent.
     
  • (1300 ET/1800 GMT) Baker Hughes reports U.S. Oil Rig Count. 

Key Events Ahead

  • (0800 ET/1300 GMT) Federal Reserve Bank of St. Louis President James Bullard's speech
     
  • (1100 ET/1600 GMT) BoE's Mark Carney, IMF's Christine Lagarde, BOJ's Haruhiko Kuroda participate in a panel discussion at the World Economic Forum in Davos.

FX Beat

DXY: The dollar index declined to 3-year lows amid strengthening expectations for global growth and Eurozone and Japanese monetary policy. The greenback against a basket of currencies traded 0.6 percent down at 88.88, having touched a low of 88.44 earlier, its lowest since December 2014. FxWirePro's Hourly Dollar Strength Index stood at -77.40 (Slightly Bearish) by 1000 GMT.

EUR/USD: The euro rallied towards the 1.2500 handle after the European Central Bank's Survey showed Eurozone inflation could be faster in the coming years while long-term projections remain steady. The economy's headline inflation could be 1.5 percent this year and 1.7 percent next year, both 0.1 percentage point above projections in October. The European currency traded 0.5 percent up at 1.2456, having touched a high of 1.2537 the day before, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at 2.58 (Neutral) by 1000 GMT. Immediate resistance is located at 1.2500, a break above targets 1.2590. On the downside, support is seen at 1.2351 (50.0% retracement of 1.2264 and 1.2537), a break below could drag it lower 1.2307 (38.2% retracement).

USD/JPY: The dollar slumped against the Japanese yen as comments by senior U.S. officials this week advocated their support for a weak dollar. The major was trading 0.3 percent down at 109.07, having hit a low of 108.50 the day before, its lowest since Sept 11. FxWirePro's Hourly Yen Strength Index stood at -72.22 (Bearish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. preliminary gross domestic product, goods trade balance and durable goods orders for further momentum. Immediate resistance is located at 110.00 (50.0% retracement of 111.49 and 108.50), a break above targets 110.35 (38.2% retracement). On the downside, support is seen at 108.30, a break below could take it near 108.00.

GBP/USD: Sterling rose above the 1.4200 handle after official data showed British economic growth unexpectedly picked up speed in the last three months of 2017. The economy's gross domestic product grew at its fastest pace of the year, rising by 0.5 percent from the previous three months. Sterling traded 0.8 percent up at 1.4249, having hit a high of 1.4344 the day before, it’s highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at 116.89 (Highly Bullish) by 1000 GMT. Immediate resistance is located at 1.4370, a break above could take it near 1.4400. On the downside, support is seen at 1.4040 (5-DMA), a break below targets 1.4009 (61.8% retracement of 1.3458 and 1.4344). Against the euro, the pound was trading 0.2 percent up at 87.49 pence, having hit a high of 86.87 pence the day before, it’s highest since Jun. 2017.

USD/CHF: The Swiss franc advanced, extending gains for the fourth straight session, as the greenback traded near 3-year lows. The major trades 0.8 percent down at 0.9335, having touched a low of 0.9290 the day before, it’s lowest since August. 2015. FxWirePro's Hourly Swiss Franc Strength Index stood at 130.88 (Highly Bullish) by 1000 GMT. On the higher side, near-term resistance is around 0.9434 (61.8% retracement of 0.9666 and 0.9290) and any break above will take the pair to next level till 0.9479 (50.0% retracement). The near-term support is around 0.9260 and any close below that level will drag it to next level till 0.9200.

Equities Recap

European shares advanced, boosted by a solid update from luxury goods maker, while the euro rallied as dollar's rebound ran out of steam.

The pan-European STOXX 600 index gained 0.4 percent to 400.24 points, while the FTSEurofirst 300 index edged up 0.5 percent to 1,573.78 points.

Britain's FTSE 100 trades 0.3 percent higher at 7,642.04 points, while mid-cap FTSE 250 gained 0.2 percent to 20,560.16 points.

Germany's DAX rose 0.1 percent at 13,311.98 points; France's CAC 40 trades 0.9 percent up at 5,527.90 points.

Commodities Recap

Crude oil prices rose, reversing early session losses as ongoing weakness in the U.S. dollar supported fuel consumption. International benchmark Brent crude was trading 0.5 percent up at $70.42 per barrel by 1010 GMT, having hit a high of $71.26 the day before, its highest since Dec. 2014. U.S. West Texas Intermediate was trading 0.5 percent up at $65.56 a barrel, after rising as high as $66.63 on Thursday, its highest since Dec. 2014.

Gold prices rose after easing from 1-1/2-year highs in the previous session, as the dollar remained weak despite U.S. President Donald Trump backing a stronger currency. Spot gold gained 0.4 percent to $1,353.82 per ounce by 1012 GMT, having hit a high of 1,365.95 on Thursday, highest since Aug. 3, 2016. U.S. gold futures were down 0.6 percent at $1,354.70 per ounce.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.641 percent higher by 0.02 bps, while 5-year yield was 0.025 bps up at 2.108 percent.

The German bunds remained narrowly mixed as investors traded sideways in muted session. The German 10-year bond yields, which move inversely to its price, slipped nearly 1 basis point to 0.60 percent, the yield on 30-year note slumped 2 basis points to 1.28 percent and the yield on short-term 2-year traded flat at -0.56 percent.

The UK long-term gilts jumped Friday as investors have largely shrugged-off the country’s higher-than-expected fourth-quarter gross domestic product (GDP). Markets now focus on Bank of England (BoE) Governor Mark Carney’s speech, due later today for further direction in the debt market. The yield on the benchmark 10-year gilts, fell 1 basis point to 1.40 percent, the super-long 30-year bond yields also slipped 1 basis point to 1.87 percent while the yield on the short-term 2-year traded tad higher at 0.60 percent.

The Japanese government bonds gained on the last trading day of the week Friday as investors covered previous short positions and as the country’s national consumer price inflation index for the month of December disappointed market expectations, albeit higher than the previous reading in November.  The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped nearly 1 basis point to 0.07 percent, the yield on the long-term 30-year note traded tad lower at 0.82 percent and the yield on short-term 2-year remained flat at -0.12 percent.

The New Zealand government bonds surged at the time of closing on cues from the country’s consumer price-led inflation index (CPI) for the fourth quarter of this year disappointed market expectations, flocking investors into safe-haven assets. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 1-1/2 basis points to 2.92 percent, the yield on 20-year also slipped 1-1/2 basis points to 3.41 percent while the yield on short-term 2-year ended 1 basis point lower at 1.97 percent.

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November 16 21:00 UTC Released

UST Flows,Incl.Swaps

Actual

16.7 Bln USD

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Previous

111.5 Bln USD

November 16 21:00 UTC Released

USOverall Net Capital Flows

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-29.1 Bln USD

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108.2 Bln USD

January 31 00:00 UTC 419424419424m

ARAnnual Primary Balance*

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2016 bln ARS

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January 31 00:00 UTC 419424419424m

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2016 bln ARS

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January 22 19:00 UTC 431244431244m

ARTrade Balance

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-1541 %

January 31 00:00 UTC 419424419424m

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2016 bln ARS

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Bln AR bln ARS

January 22 19:00 UTC 431244431244m

ARTrade Balance

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-1541 %

January 31 00:00 UTC 419424419424m

ARAnnual Primary Balance*

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2016 bln ARS

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Bln AR bln ARS

January 31 00:00 UTC 419424419424m

ARAnnual Primary Balance*

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2016 bln ARS

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Bln AR bln ARS

January 31 00:00 UTC 419424419424m

ARAnnual Primary Balance*

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Forecast

2016 bln ARS

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Bln AR bln ARS

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