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Europe Roundup: Sterling hits 3-week trough amid Brexit uncertainty, greenback rallies as funding deal and trade talks concerns ease, European shares advance - Tuesday, February 12th, 2019

Market Roundup

  • Brexit: UK House of Commons leader Leadsom says necessary legislation for no-deal Brexit will be passed by March 29
     
  • Brexit: UK House of Commons leader Leadsom says vote on May's deal will come back when issue of backstop sorted out
     
  • Brexit: UK House of Commons leader Leadsom says meaningful vote will come back as soon as it can
     
  • Brexit: UK House of Commons leader Leadsom says the UK cannot be held in a backstop permanently
     
  • Brexit: UK House of Commons leader Leadsom says parliament will support May's deal providing Irish Backstop is not permanent
     

Economic Data Ahead

  • (1000 ET/1500 GMT) The U.S. Labor Department releases Job Openings and Labor Turnover Survey (JOLTS) report for the month of December. The report is expected to show job openings rose to 6.960 million from 6.888 million in November.
     
  • (1630 ET/2030 GMT) API reports its weekly crude oil stock.
     

Key Events Ahead

  • (0715 ET/1215 GMT) Bank of England Governor Mark Carney speaks at an FT event - London
     
  • (1245 ET/1745 GMT) Federal Reserve Chairman Jerome Powell is scheduled to speak on "Economic Development in High Poverty Rural Communities" at the Hope Enterprise Corporation Rural Policy Forum.
     
  • (1830 ET/2330 GMT) Federal Reserve Bank of Cleveland President Loretta Mester speaks on economic outlook and monetary policy at Xavier University and Financial Executives International - Cincinnati, Ohio
     
  • (1930 ET/0030 GMT) Federal Reserve Bank of Kansas City President Esther George is scheduled to speak on "Charting America's Economic Course" at a public conversation hosted by the Kansas City Public Library.
     

FX Beat

DXY: The dollar index declined from an 8-week peak after former Federal Reserve Chairman Paul Volcker warned the Trump administration’s handling of domestic issues as well as trade talks with China is denting the United States’ long-term prosperity. The greenback against a basket of currencies trades 0.05 percent down at 97.01, having touched a high of 97.20 earlier, its highest since December 17. FxWirePro's Hourly Dollar Strength Index stood at 86.45 (Slightly Bullish) by 1000 GMT.

EUR/USD: The euro bounced back from a 2-1/2 month low as the greenback eased from multi-week peaks. However, the upside appears limited as expectations the European Central Bank will maintain a highly accommodative monetary policy this year dented euro bulls' sentiment. The European currency traded 0.05 percent up at 1.1280, having touched a low of 1.1257 earlier, its lowest since Nov. 13. FxWirePro's Hourly Euro Strength Index stood at 61.98 (Bullish) by 1000 GMT. Immediate resistance is located at 1.1341 (5-DMA), 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 1.1179.

USD/JPY: The dollar surged to a fresh 6-1/2 week peak after U.S. and Chinese officials expressed hopes that a new round of talks would bring them closer to ease their seven-month trade war. The major was trading 0.1 percent up at 110.48, having hit a high of 110.65 earlier, its highest since December 28. FxWirePro's Hourly Yen Strength Index stood at 1.74 (Neutral) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of Fed officials' speeches. Immediate resistance is located at 110.94 (Aug. 13 Low), a break above targets 111.40 (Dec. 26 Low). On the downside, support is seen at 109.96 (5-DMA), a break below could take it lower at 109.16 (Jan. 28 Low).

GBP/USD: Sterling plunged to a 3-week trough amid growing concerns whether Prime Minister Theresa May can convince the European Union to accept changes to her Brexit divorce deal.  The major traded 0.05 percent down at 1.2848, having hit a low of 1.2832 earlier; it’s lowest since January 21. FxWirePro's Hourly Sterling Strength Index stood at -93.44 (Slightly Bearish) 1000 GMT. Immediate resistance is located at 1.2939 (5-DMA), a break above could take it near 1.3001 (January 17 High). On the downside, support is seen at 1.2819 (January 14 Low), a break below targets 1.2795 (November 26 High). Against the euro, the pound was trading 0.1 percent down at 87.81 pence, having hit a low of 88.21 last week, it’s lowest since Jan. 22.

USD/CHF: The Swiss franc declined, hovering towards a 3-month low hit in the prior session, as news that U.S. lawmakers reached a deal on border security funding that could help avert another partial shutdown revived investor sentiment. The major trades 0.4 percent higher at 1.0074, having touched a high of 1.0096 on Monday; it’s highest since November 14. FxWirePro's Hourly Swiss Franc Strength Index stood at -104.73 (Highly Bearish) 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 gained, boosted by signs of a compromise in the standoff over the U.S. government funding and positive signals around U.S.-China trade talks.

The pan-European STOXX 600 index rallied 0.6 percent at 363.31 points, while the FTSEurofirst 300 index surged 0.7 percent to 1,431.10 points.

Britain's FTSE 100 trades 0.4 percent up at 7,158.33 points, while mid-cap FTSE 250 gained 0.2 to 18,874.66 points.

Germany's DAX rose 1.1 percent at 11,137.55 points; France's CAC 40 trades 0.9 percent higher at 5,061.19 points

Commodities Recap

Crude oil prices rallied amid OPEC-led supply cuts and U.S. sanctions against Iran and Venezuela, although concerns over economic growth capped upside.  International benchmark Brent crude was trading 1.05 percent up at $62.18 per barrel by 1022 GMT, having hit a low of $60.58 on Thursday, its lowest since February 1. U.S. West Texas Intermediate was trading 1.2 percent higher at $53.03 a barrel, after falling as low as $51.22 on Monday, its lowest since the January 17.

Gold prices surged as the dollar eased from multi-week highs, while global economic slowdown worries and uncertainties surrounding U.S.-China trade talks boosted the safe-havens demand. Spot gold was 0.3 percent up at $1,311.83 per ounce by 1025 GMT, having touched a low of $1,302.71 on Thursday, its lowest level since Jan. 29. U.S. gold futures were also mostly unchanged at $1,312.70 per ounce.

Treasuries Recap

The U.S. Treasury yields fell during late European session as investors wait to watch the country’s JOLTs job openings data for the month of December and a host of speeches by FOMC members George and Mester, scheduled for 15:00GMT, 22:30GMT and 23:30GMT respectively. The yield on the benchmark 10-year Treasury yield rose nearly 2 basis points to 2.679 percent, the super-long 30-year bond yields edged 1-1/2 basis points higher to 3.014 percent and the yield on the short-term 2-year too traded 1-1/2 basis points higher at 2.504 percent.

The United Kingdom’s gilts suffered during the afternoon session, ahead of Bank of England’s (BoE) Governor Mark Carney keynote speech on February 12 by 13:00GMT and the country’s consumer price inflation (CPI) data for the month of January, due on February 13, which will provide further direction to the debt market. The yield on the benchmark 10-year gilts, remained flat at 1.181 percent, the super-long 30-year bond yields remained tad higher at 1.690 percent and the yield on the short-term 2-year traded 1/2 basis point higher at 0.728 percent.

The Japanese government bonds remained mixed towards the end of Asian session, despite a surge in global risk sentiments after a fresh round of trade talks started between the United States and China, thus pushing global stock prices higher. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 1-1/2 basis points to -0.013 percent, the yield on the long-term 30-year jumped nearly 2-1/2 basis points to 0.602 percent and the yield on short-term 2-year plunged 16 basis points to -0.160 percent.

The Australian government bonds slumped across the curve during Asian trading session on hopes of possible trade agreement. Still, low investor risk appetite due to fear of another U.S. government shutdown, limited the growth in bond yields. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose  about 2 basis points to 2.112 percent, the yield on the long-term 30-year bond also climbed 2 basis points to 2.66 percent and the yield on short-term 2-year jumped over 1 basis points to 1.75 percent.

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March 26 04:00 UTC Released

THManufacturing Prod YY

Actual

-1.6 %

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0.52 %

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0.18 %

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NZTrade Balance YY

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-6.62 Bln NZ

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-6.36 Bln NZ

January 31 00:00 UTC 603618603618m

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2016 bln ARS

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January 22 19:00 UTC 615438615438m

ARTrade Balance

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-1541 %

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2016 bln ARS

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January 22 19:00 UTC 615438615438m

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-1541 %

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2016 bln ARS

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January 31 00:00 UTC 603618603618m

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2016 bln ARS

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January 31 00:00 UTC 603618603618m

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2016 bln ARS

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