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Europe Roundup: Sterling off 1-month high following BoE Vlieghe remarks, euro rises above 1.0800 on better-than-expected composite PMI, markets eye  U.S. healthcare vote - Friday, March 24th, 2017

Market Roundup

  • EUR/USD +0.2%, USD/JPY +0.1%, GBP/USD -0.3%, DXY -0.1%
     
  • DAX -0.1%, CAC, -0.4%, FTSE -0.1%, Brent +0.8%, Gold -0.1%
     
  • Oil better bid ahead of w/e OPEC meet
     
  • Germany Mar Markit Comp flash PMI 57.0 vs previous 56.1. 56.0 forecast
     
  • EZ Mar Markit Manufacturing flash PMI 56.2 vs previous 55.4. 55.3 forecast
     
  • EZ Mar Markit Service flash PMI 56.5 vs previous 55.5. 55.3 forecast
     
  • EZ Mar Markit Composite flash PMI 56.7 vs previous 56.0. 55.8 forecast
     
  • EZ businesses growing at fastest rate in nearly six years -PMI
     
  • Great Britain Feb BBA Mortgage Approvals 42.613k vs previous 44.142k revised 3-month low
     
  • Switzerland Q4 current account surplus widens to CHF22 bln
     
  • CB's chief economist stands by pledge to keep policy easy - Il Sole
     
  • Schaeuble criticizes foreign min for saying Germany should pay more to EU
     
  • BoE Vlieghe: inflation rise does not mean rate hike - The Times
     
  • Poll: unprecedented uncertainty among FR voters before presidential election
     
  • Swedish industrial activity stronger than expected - Riksbank survey

Economic Data Ahead

  • (0830 ET/1230 GMT) The U.S. durable goods orders are expected to have increased 1.2 percent in February after rising 2.0 percent in January, while non-defense capital goods orders excluding aircraft are likely to have gained 0.6 percent after declining 0.1 percent the prior month.
     
  • (0830 ET/1230 GMT) The Statistics Canada is expected to report that annual inflation rate remained steady at 2.1 percent in February, while core consumer price index rose 0.3 percent in January.
     
  • (0930 ET/1330 GMT) Brazil's current account deficit is likely to widen to $0.40 billion in February from the previous month.
     
  • (1000 ET/1400 GMT) Mexican retail sales are likely to have gained 5.1 percent in January on an annual basis after rising 9.0 percent in the previous month.
     
  • (1045 ET/1445 GMT) Financial firm Markit Economics is likely to report that preliminary U.S. service PMI business activity index rose to 54.2 in March after printing a final reading of 53.8 in February.
     
  • (1045 ET/1445 GMT) Financial firm Markit releases U.S. preliminary Manufacturing PMI for the month of March. The index is likely edged up to 54.8 after posting a final reading of 54.2 in the previous month.

Key Events

  • (0845 ET/1245 GMT) Federal Reserve Bank of Chicago President Charles Evans gives opening remarks before the Federal Reserve System Community Development Research Conference.
     
  • (0830 ET/1230 GMT) Federal Reserve Bank of San Francisco Williams discusses paper on natural rate of interest; Washington
     
  • (0905 ET/1305 GMT) Federal Reserve Bank of St. Louis President James Bullard gives a presentation on the U.S. economy and monetary policy before the Economic Club of Memphis Economic Briefing.
     
  • (1000 ET/1400 GMT) Federal Reserve Bank of New York President William Dudley participates in a fireside chat with York College business and economics students.
     
  • (1130 ET/1530 GMT) Canada's Finance Minister Bill Morneau will speak in Toronto.
     
  • (1145 ET/1545 GMT) FedTrade 30-year Fannie Mae / Freddie Mac (max $1.15 bn)
     

FX Beat

DXY: The dollar retreated from recent lows versus the Japanese yen, as investors awaited a vote on U.S. President Donald Trump's healthcare bill later in the day. The greenback against a basket of currencies traded flat at 99.70, having hit a low of 99.55 on Wednesday, its lowest since Feb. 2. FxWirePro's Hourly Dollar Strength Index stood at -54.94 (Bearish) by 1000 GMT.

EUR/USD; The euro rose above the 1.0800, retreating from daily lows following better-than-expected Eurozone's Markit preliminary manufacturing and service PMI's. The economy's Flash Composite Purchasing Managers' Index rose to 56.7 in March from 56.0 in February, recording its highest reading since April 2011. The European currency traded 0.2 percent higher at 1.0808, hovering towards a high of 1.0824 touched on Wednesday, its highest since Feb. 2. FxWirePro's Hourly Euro Strength Index stood at 0.94 (Neutral) by 1000 GMT. The major intraday support remains at 1.07500 and break below will drag the pair down till 1.07200/1.07060. The major resistance is around 1.0830 and any break above targets 1.08735 level.

USD/JPY: The dollar steadied after declining for previous eight sessions as a continuous rise in the U.S. Treasury bond yields underpinned the greenback's demand. Moreover, the major's recovery was also supported by disappointing release of Flash Japanese Manufacturing PMI print for March which weakened the bid tone around the Japanese Yen. The pair traded 0.1 percent up at 111.06, retreating from a low of 110.62 hit in the previous session, its lowest since Nov. 22. FxWirePro's Hourly Yen Strength Index stood at 108.91 (Highly Bullish) by 1000 GMT. On the higher side, any break above 112 (support turned into resistance) will take the pair till 113.47 (21- day EMA)/114.30. The near term support is around 111 and any break below will drag it till 110/108.65.

GBP/USD: Sterling eased from a 1-month high touched in the previous session after Bank of England policymaker Gertjan Vlieghe stated that a rise in inflation over 3 percent might not prompt him to consider hiking interest rates. Moreover, downbeat UK BBA mortgage approvals report and a sharp rise in the U.S. dollar across the board undermined the major's demand. The pair trades 0.25 lower at 1.2489, drifting away from a high of 1.2531 hit on Thursday, its highest since Feb. 24. FxWirePro's Hourly Sterling Strength Index stood at 15.03 (Neutral) by 1000 GMT. Any break above 1.2582 will take it till 1.27060. On the lower side, any break below 1.24200 will drag it till 1.23800/1.2345 in the short term. Against the euro, the pound traded 0.4 percent down at 86.47 pence, having hit a high of 86.04 the day before, its highest since Mar 3.

USD/CHF: The Swiss franc rose, regaining most of previous session losses, as markets waited to see whether U.S. President Donald Trump succeeds in pushing through healthcare reforms. The major traded 0.2 percent lower at 0.9909, hovering towards a low of 0.9881 touched on Wednesday, its weakest since Feb. 2. FxWirePro's Hourly Swiss Franc Strength Index stood at 144.93 (Highly Bullish) by 1000 GMT. On the lower side, major support is around 0.9880 and any close below will drag the pair  till 0.97850 (61.8% retracement of 0.9537 and 1.0170). The near term resistance is around 0.9960 (support turned into resistance) and any break above will take it till 1.000/1.0040 (10- day MA)/1.0060.

AUD/USD: The Australian dollar eased to a 1-week low earlier in the day as the greenback recovered following a rise in the U.S. Treasury bond yields. The Aussie trades 0.15 percent down at 0.7612, having hit a low of 0.7607 earlier, it’s lowest since Mar. 15. FxWirePro's Hourly Aussie Strength Index stood at -127.30 (Highly Bearish) by 1000 GMT. On the lower side, the next immediate support stands at 0.7590 (55- day EMA) and any break below will drag the pair down till 0.7558 (100- day EMA)/ 0.7540 (200- day MA). The major resistance is around 0.7750 (Feb 23 high) and break above will take it till 0.7800.

Equities Recap

European shares tumbled in early trade, while the dollar recovered across the board as investors await Fed officials' speeches and a vote on Trump's healthcare bill.

The pan-European STOXX 600 index slumped 0.26 percent to 376.23 points, while the FTSEurofirst 300 index declined 0.24 percent to 1,483.37 points.

Britain's FTSE 100 trades 0.04 percent down at 7,337.89 points, while mid-cap FTSE 250 eased 0.31 percent to 18,943.89 points.

Germany's DAX edged down 0.03 percent at 12,036.01 points; France's CAC 40 trades 0.33 percent lower at 5,016.30 points.

Tokyo's Nikkei gained 0.93 percent to 19,262.353 points, Australia's S&P/ASX 200 index rose 0.81 percent to 5,754.40 points and South Korea's KOSPI fell 0.17 percent to 2,168.95 points.

Shanghai composite index climbed 0.6 percent to 3,269.45 points, while CSI300 index jumped 0.8 percent to 3,489.60 points. Hong Kong’s Hang Seng added 0.1 percent to 24,358.27 points.

Commodities Recap

Crude oil prices edged up after declining for four consecutive sessions, as a fall in Saudi exports to the United States supported fuel prices. International benchmark Brent crude was trading 0.6 percent down at $50.79 per barrel by 0918 GMT, having hit a low of $49.75 on Wednesday, its lowest since Nov. 30. U.S. West Texas Intermediate crude rose 0.73 percent to $48.00 a barrel, after falling as low as $47.08 earlier in the week, its weakest since Nov. 30. Brent was on track for a weekly fall of about 2.1 percent, while WTI was off about 1.9 percent.

Gold prices edged lower as the dollar recovered from recent lows, however, the it was on track for its second straight week of gains. Spot gold fell 0.12 percent at $1,243.38 per ounce by 0922 GMT, having hit a high of $1,253.06 on Thursday, its strongest since Feb. 28. U.S. gold futures were down 0.4 percent at $1,242.20.

Treasuries Recap

The U.S. Treasuries slipped ahead of the Federal Open Market Committee (FOMC) members James Bullard and William C. Dudley’s scheduled speeches later in the day. The yield on the benchmark 10-year Treasury rose nearly 1 basis point to 2.42 percent, the super-long 30-year bond yield also climbed 1 basis point to 3.03 percent and the yield on short-term 2-year note traded 2 basis points up at 1.26 percent.

The UK gilts rose, following disappointment in the country’s riskier equities, while a slight uptick in energy prices offset the upside. The yield on the benchmark 10-year gilts, fell nearly 1/2 basis point to 1.22 percent, the super-long 30-year bond yields also slid nearly 1-1/2 basis points to 1.79 percent and the yield on the short-term 2-year traded 1 basis point lower at 0.14 percent.

The German bunds dived as investors booked in profits after a long rally and following higher-than-expected manufacturing PMI for the month of March which remained crucial in determining the future direction of the bond market. The yield on the benchmark 10-year bond, rose 1 basis point to 0.44 percent, the long-term 15-year bond yields also jumped 1-1/2 basis points to 0.61 percent and the yield on short-term 1-year bond also traded 4-1/2 basis points higher at -0.76 percent.

The Japanese government bonds traded modestly lower, tracking softness in U.S. Treasuries and as investors are waiting to read the February retail sales data, scheduled to be released early next week for further direction in the debt market. The benchmark 10-year bond yield, rose 1 basis point to 0.06 percent, the long-term 30-year bond yields also pushed higher by 1 basis point to 0.84 percent and the yield on the short-term 2-year note traded 1/2 basis point up at -0.26 percent.

The New Zealand bonds closed flat as investors largely shrugged-off the worse-than-expected trade deficit for the month of February. The yield on the benchmark 10-year bond, fell 1 basis point to 3.23 percent, the yield on 7-year note hovered around 2.83 percent while the yield on short-term 2-year note closed flat at 2.15 percent.

The Australian bonds snapped rally, tracking weakness in the U.S. counterpart and as investors poured into riskier assets, including equities and crude oil. The yield on the benchmark 10-year Treasury note, rose 1 basis point to 2.77 percent, the yield on 15-year note also climbed 1 basis point to 3.17 percent and the yield on short-term 2-year traded 1/2 basis point higher at 1.78 percent.

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