Market Roundup
- EUR/USD 0.45%, USD/JPY 0.33%, GBP/USD 0.65%, EUR/GBP -0.19%
- DXY -0.27%, DAX 0.63%, FTSE 0.36%, Brent -0.1%, Gold 0.11%
- France GDP QQ Final Q4, 0.7%, 0.6% previous
- UK Fiance Mortage Approvals 38.120k, 40.117k previous
- US, S.Korea revise trade deal, Korean steel faces quota
- U.S. sends China to-do list to reduce trade imbalance - WSJ
- Germany's Weidmann says diversity of views is strength for ECB
- Brexit delivers longer blow to bank sentiment than global crisis -survey
- Political worries push up Italian bond yields; ratings upgrade helps Spain
- IMF's Lagarde proposes "rainy day fund" for the eurozone
- Gold dips as trade war fears ease on report of U.S.-China talks
- Oil prices find support in trade talks and Mideast tensions
Economic Data Ahead
- (0830 ET/1230 GMT) The Federal Reserve Bank of Chicago will release its Chicago Fed National Activity Index (CFNAI) for the month of February. The index stood at 0.12 in the prior month.
- (1030 ET/1430 GMT) The Dallas Fed releases its Manufacturing Business Index for the month of March. The index posted a rise of 37.2 percent in the previous month.
Key Events Ahead
- (1230 ET/1630 GMT) Federal Reserve Bank of New York President William Dudley is expected to speak on regulatory reform before an event hosted by the U.S. Chamber of Commerce, in Washington.
- (1630 ET/2030 GMT) Federal Reserve Bank of Cleveland President Loretta Mester is scheduled to speak on "The Economic Outlook, Monetary Policy, and Some Future Policy Considerations" at an event hosted by Princeton University's Julis-Rabinowitz Center for Public Policy and Finance.
- (1910 ET/2310 GMT) Federal Reserve Vice Chair for Supervision Randal Quarles will speak on "The Roles of Consumer Protection and Small Business Access to Credit in Financial Inclusion" at the Operation HOPE Global Forums 2018 Annual Meeting in Atlanta, Georgia.
FX Beat
DXY: The dollar index tumbled to an over 1-month low as U.S. President Donald Trump’s moved to impose tariffs on Chinese goods, triggered trade tensions between U.S and China. The greenback against a basket of currencies 0.3 percent down at 89.23, having touched a low of 89.16 earlier, its lowest since Feb. 19. FxWirePro's Hourly Dollar Strength Index stood at -136.39 (Highly Bearish) by 1000 GMT.
EUR/USD: The euro rallied to an over 2-week peak after research institutions forecast the Eurozone economy to grow at a robust rate of 0.6 percent in first half of 2018, with a marginal slowdown of growth to 0.5 percent in the third quarter. Investments are likely to rise by 1.0 percent, 0.9 percent, and 0.7 percent respectively over the first three quarters of 2018, while consumption of private households is expected to increase by 0.5 percent in the second quarter and by 0.4 percent in the third quarter. The European currency traded 0.4 percent up at 1.2408, having touched a high of 1.2416 earlier, its highest since Mar. 8. FxWirePro's Hourly Euro Strength Index stood at 62.50 (Bullish) by 1000 GMT. Immediate resistance is located at 1.2446 (Mar. 8 High), a break above targets 1.2496. On the downside, support is seen at 1.2325 (10-DMA), a break below could drag it lower 1.2285 (Mar. 22 Low).
USD/JPY: The dollar retreated from a 16-month low against the Japanese yen as fears of a U.S.-China trade war eased following reports of negotiations among two of the world's leading economies to improve U.S. access to Chinese markets. The major was trading 0.4 percent up at 105.10, having hit a low of 104.62 earlier, its lowest since Nov. 2016. FxWirePro's Hourly Yen Strength Index stood at -89.92 (Slightly Bearish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the Dallas Fed Manufacturing Index, Chicago Fed National Activity Index, and Fed officials' speech. Immediate resistance is located at 105.41 (61.8% retracement of 106.64 and 104.62), a break above targets 105.72 (5-DMA). On the downside, support is seen at 104.50, a break below could take it lower 104.05.
GBP/USD: Sterling rallied to an 8-week high against the dollar as BoE monetary policy committee member Gertjan Vlieghe on Friday indicated that the bank base rate would need to increase one or two times each year in the current tightening cycle. Moreover, the renewed optimism over the Brexit deal continued to boost the sentiment around the British pound. The major traded 0.7 percent up at 1.4223, having hit a high of 1.4226 earlier, it’s highest since Feb. 2. FxWirePro's Hourly Sterling Strength Index stood at 118.35 (Highly Bullish) by 1000 GMT. Immediate resistance is located at 1.4278 (Feb 2 High), a break above could take it near 1.4345. On the downside, support is seen at 1.4078 (5-DMA), a break below targets 1.4009 (10-DMA). Against the euro, the pound was trading 0.3 percent up at 87.18 pence, having hit a high of 86.68 pence on Thursday, it’s highest since June 2016.
USD/CHF: The Swiss franc rose, extending gains for the fourth straight sessions, as investors remained wary about the greenback's outlook amid escalating trade tensions between the United States and China. The major trades 0.1 percent down at 0.9463, having touched a low of 0.9444 the session before, it’s lowest since Mar. 15. FxWirePro's Hourly Swiss Franc Strength Index stood at -64.40 (Bearish) by 1000 GMT. On the higher side, near-term resistance is around 0.9506 (5-DMA) and any break above will take the pair to next level till 0.9569 (Mar 20 High). The near-term support is around 0.9424 (Mar. 14 Low) and any close below that level will drag it till 0.9400.
Equities Recap
European shares advanced amid optimism over the protectionist shift in U.S. trade policy, while greenback hit a 1-month low against a basket of currencies on the report of US-China trade talks.
The pan-European STOXX 600 index surged 0.3 percent to 366.95 points, while the FTSEurofirst 300 index rallied 0.4 percent to 1,436.56 points.
Britain's FTSE 100 trades 0.3 percent up at 6,944.33 points, while mid-cap FTSE 250 shed 0.1 percent to 19,302.10 points.
Germany's DAX rose 0.5 percent at 11,943.02 points; France's CAC 40 trades 0.3 percent higher at 5,110.41 points.
Commodities Recap
Crude oil prices declined from multi-week peaks hit earlier in the day as concerns of a looming trade dispute between the United States and China weighed on market sentiment. International benchmark Brent crude was trading 0.1 percent down at $70.35 per barrel by 0950 GMT, having hit a high of $70.95 earlier, its highest since Jan. 29. U.S. West Texas Intermediate was trading 0.5 percent down at $65.61 a barrel, after rising as high as $66.52, its strongest since Jan 25.
Gold prices rose to a 5-week high earlier in the session, as fears of a U.S.-China trade war sent investors seeking safe-haven assets. Spot gold was 0.1 percent up at $1,347.90 per ounce by 0954 GMT, having hit a high of $1,350.73 an ounce earlier, its highest since Feb. 19. U.S. gold futures for April delivery slipped 0.3 percent to $1,346.3 per ounce.
Treasuries Recap
The U.S. Treasuries slumped ahead of the short-term 2-year auction and a host of FOMC members’ speeches, scheduled to be held later today – members Dudley, Mester, and Quarles are due to deliver their keynote speeches at 16:30GMT, 20:30GMT and 23:10GMT respectively. The yield on the benchmark 10-year Treasuries jumped 2 basis points to 2.84 percent, the super-long 30-year bond yields also surged 2 basis points to 3.09 percent and the yield on the short-term 2-year traded 2-1/2 basis points higher at 2.28 percent.
The UK gilts plunged as investors shed away from safe-haven assets on the back of improvements and progress in the Brexit negotiations going on after Britain agreed a Brexit transition deal and investors received some clarity over a possible interest rate hike in May. The yield on the benchmark 10-year gilts, jumped nearly 2-1/2 basis points to 1.46 percent, the super-long 30-year bond yields surged close to 2 basis points to 1.77 percent and the yield on the short-term 2-year too traded nearly 2 basis points higher at 0.91 percent
The German bunds trended downwards at the start of European session amid a silent trading day that witnessed data of little economic significance. The German 10-year bond yields, which move inversely to its price, rose nearly 1 basis point to 0.53 percent, the yield on the 30-year note edged 1 basis point higher to 1.17 percent and the yield on short-term 2-year too traded 1-1/2 basis points lower at -0.57 percent.
The New Zealand government bonds closed higher as investors have largely shrugged-off the better-than-expected trade balance data for the month of February amid global trade war tensions that continued to mount. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 3 basis points to 2.80 percent, the yield on 20-year plunged 3-1/2 basis points to 3.32 percent while the yield on short-term 2-year closed 2 basis points lower at 1.91 percent
The Japanese government bonds remained flat during Asian session as trade war tensions continued to hover around investors’ sentiments, albeit at a softer pace than at the start of last week. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.02 percent, the yield on the long-term 30-year note also remained flat at 0.74 percent and the yield on short-term 2-year too traded steady at -0.15 percent.
The Australian government bond yields edged lower as investors moved their funds to high yielding alternative assets like equities. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 1 basis point to 2.667 percent, the yield on the long-term 30-year note climbed 1-1/2 basis points to 3.266 percent and the yield on short-term 2-year up 1/2 basis point to 2.048 percent.
