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Europe Roundup: Sterling off 2-month peak on weaker-than-expected retail sales, euro rebounds on ECB rate hike hopes, European shares surge - Friday, January 18th, 2019

Market Roundup

  • United Kingdom Dec 2018 retail sales ex-fuel yy decrease to 2.6 % (forecast 3.9 %) vs previous 3.5 % (revised from 3.8 %)
     
  • United Kingdom Dec 2018 retail sales ex-fuel mm decrease to -1.3 % (forecast -0.6 %) vs previous 1 % (revised from 1.2 %)
     
  • United Kingdom Dec 2018 retail sales yy decrease to 3 % (forecast 3.6 %) vs previous 3.4 % (revised from 3.6 %)
     
  • United Kingdom Dec 2018 retail sales mm decrease to -0.9 % (forecast -0.8 %) vs previous 1.3 % (revised from 1.4 %)
     
  • Eurozone Nov 2018 current account sa, eur decrease to 20.3 eur vs previous 26.8 eur (revised from 22.993 eur)
     
  • Eurozone Nov 2018 current account nsa,eur decrease to 23.2 eur vs previous 30.4 eur (revised from 26.6 eur)
     
  • Eurozone Nov 2018 current account sa, eur decrease to 20 eur vs previous 27 eur (revised from 22.993 eur)
     
  • Switzerland Dec 2018 producer/import price yy decrease to 0.6 % vs previous 1.4 %
     
  • Switzerland Dec 2018 producer/import price mm decrease to -0.6 % vs previous -0.3 %
     

Economic Data Ahead

  • (0830 ET/1330 GMT) The Statistics Canada will report foreign portfolio investment in domestic stocks for the month of November.
     
  • (0830 ET/1330 GMT) The Statistics Canada will release investment in foreign securities figures for the month of November.
     
  • (0830 ET/1330 GMT) The Statistics Canada is expected to report that annual inflation rate remained unchanged 1.7 percent in December, while core consumer price index edged up 0.1 percent in November.
     
  • (0915 ET/1415 GMT) The Federal Reserve is likely to report that industrial production rose 0.2 percent in December after increasing 0.6 in the prior month.
     
  • (0915 ET/1415 GMT) The Federal Reserve Board is expected to report that capacity utilization remained steady at 78.5 percent in December.
     
  • (1000 ET/1500 GMT) The University of Michigan is likely to report that U.S. preliminary consumer sentiment index declined to 97.0 in January after posting a final reading of 98.3 in December.
     
  • (1300 ET/1800 GMT) Baker Hughes reports U.S. Oil Rig Count. 
     

Key Events Ahead

  • (0905 ET/1405 GMT) Federal Reserve Bank of New York President John Williams speaks on the U.S. economic outlook and monetary policy before the New Jersey Bankers Association Economic Leadership Forum in Somerset, New Jersey
     
  • (1100 ET/1600 GMT) Federal Reserve Bank of Philadelphia President Patrick Harker speaks on "Business, Equity and the Future of Philadelphia" before event, "The Prosperity Symposium: Economic Mobility Research in Action", in Philadelphia

FX Beat

DXY: The dollar index consolidated near a 2-week peak, as the yield on the benchmark 10-year Treasuries jumped nearly 2 basis points to 2.764 percent. The greenback against a basket of currencies trades flat at 96.03, having touched a high of 96.26 on Tuesday, its highest since Jan. 4. FxWirePro's Hourly Dollar Strength Index stood at 32.66 (Neutral) by 1000 GMT.

EUR/USD: The euro rebounded from a 2-week low touched in the previous session after Reuters poll showed the European Central Bank is likely to wait until the fourth quarter to hike its interest rate. The European currency traded 0.1 percent up at 1.1404, having touched a low of 1.1370 on Thursday, its lowest since Jan. 4. FxWirePro's Hourly Euro Strength Index stood at 3.87 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1442 (December 10 High), a break above targets 1.1500 (November 7 High). On the downside, support is seen at 1.1356 (December 21 Low), a break below could drag it till 1.1325 (Jan. 2 Low).

USD/JPY: The dollar surged to an over 2-week peak, as investor sentiment was slightly boosted on signs of growing optimism in trade talks between China and the United States. The major was trading 0.2 percent up at 109.39, having hit a high of 109.59, its highest since Jan 2. FxWirePro's Hourly Yen Strength Index stood at -156.15 (Highly Bearish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. industrial production, capacity utilization and FOMC Member William's speech. Immediate resistance is located at 109.68 (Jan. 2 High), a break above targets 110.47 (Dec. 31 High). On the downside, support is seen at 108.44 (Jan. 8 Low), a break below could take it lower at 108.02 (Jan. 7 Low).

GBP/USD: Sterling retreated from a 2-month peak as British retail sales declined for the first time since March during the three months to December, confirming a slowdown in consumer spending as Brexit deadline looms. The major traded 0.3 percent down at 1.2944, having hit a high of 1.3001 on Thursday; it’s highest since November 15. FxWirePro's Hourly Sterling Strength Index stood at 81.37 (Slightly Bullish) 1000 GMT. Immediate resistance is located at 1.3030 (November 15 High), a break above could take it near 1.3107 (November 6 High). On the downside, support is seen at 1.2921 (October 4 Low), a break below targets 1.2879 (November 14 Low). Against the euro, the pound was trading 0.5 percent down at 88.10 pence, having hit a high of 87.63 on Thursday, it’s highest since November 15.

USD/CHF: The Swiss franc steadied near a 3-week low, as a report suggested progress towards resolving the trade dispute between the United States and China. The major trades flat at 0.9940, having touched a high of 0.9954 on Thursday; it’s highest since December 27. FxWirePro's Hourly Swiss Franc Strength Index stood at -99.77 (Slightly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 0.9963 (December 26 High) and any break above will take the pair to next level till 0.9996 (December 3 High). The near-term support is around 0.9889 (December 7 Low), and any close below that level will drag it till 0.9846 (January 3 Low).

Equities Recap

European shares rallied as renewed hope about the U.S.-China trade negotiations boosted investor risk sentiment.

The pan-European STOXX 600 index climbed 0.9 percent at 354.01 points, while the FTSEurofirst 300 index advanced 0.9 percent to 1,392.32 points.

Britain's FTSE 100 trades 0.2 percent up at 6,901.06 points, while mid-cap FTSE 250 rallied 0.5 to 18,635.75 points.

Germany's DAX rose 1.1 percent at 11,035.18 points; France's CAC 40 trades 1.2 percent higher at 4,850.56 points.

Commodities Recap

Crude oil prices rose by more than 1 percent after a report from the Organization of the Petroleum Exporting Countries showed its production declined sharply in December, easing fears about prolonged oversupply. International benchmark Brent crude was trading 1.1 percent up at $61.84 per barrel by 1024 GMT, having hit a high of $61.96, its highest since January 11. U.S. West Texas Intermediate was trading 0.9 percent higher at $52.65 a barrel, after rising as high as $52.84, its highest since the January 11.

Gold prices slumped to an over 1-week low as risk sentiment got a boost from hopes of progress in U.S.-China trade talks. Spot gold was down 0.5 percent at $1,285.65 per ounce, having touched a low of $1,283.55 earlier, its lowest level since Jan. 9. U.S. gold futures were down 0.2 percent at $1,290 per ounce.

Treasuries Recap

The U.S. Treasuries suffered on the last trading day of the week, ahead of the country’s industrial production data for the month of December and FOMC members Williams and Harker’s speech, both scheduled for later today. The yield on the benchmark 10-year Treasuries jumped nearly 2 basis points to 2.764 percent, the super-long 30-year bond yields rose 1 basis point to 3.087 percent and the yield on the short-term 2-year traded 2 basis points higher at 2.583 percent.

The United Kingdom’s gilts slumped during the afternoon session despite a worse-than-expected retail sales data for the month of December, released today amid the ongoing Brexit chaos, followed by PM May’s survival of the no-confidence vote on Wednesday. The yield on the benchmark 10-year gilts, jumped 2 basis points to 1.356 percent, the super-long 30-year bond yields also surged 2 basis points to 1.872 percent and the yield on the short-term 2-year traded tad higher at 0.824 percent.

The Japanese government bonds remained narrowly mixed after the country’s national consumer price inflation (CPI) data for the month of December disappointed market sentiments and industrial production for November improved from that in the previous month. The yield on the benchmark 10-year JGB note, which moves inversely to its price, rose 1 basis point to 0.010 percent, the yield on the long-term 30-year note hovered around 0.700 percent while the yield on short-term 2-year slumped 17 basis points to -0.169 percent.

The Australian government bonds slumped across the curve during Asian trading session as better-than-expected U.S. economic data and progress in U.S.-China trade talks helped investors to move from safe-haven buying. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 3 basis points to  2.315 percent, the yield on the long-term 30-year bond climbed 2 basis points to 2.849 percent and the yield on short-term 2-year up 2-1/2 basis points to 1.891 percent.

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April 19 12:30 UTC Released

USHouse Starts MM: Change

Actual

-0.3 %

Forecast

Previous

-8.7 %

April 19 12:30 UTC Released

USHousing Starts Number MM

Actual

1.139 Mln

Forecast

1.23 Mln

Previous

1.162 Mln

January 31 00:00 UTC 638794638794m

ARAnnual Primary Balance*

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Forecast

2016 bln ARS

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Bln AR bln ARS

January 31 00:00 UTC 638794638794m

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Forecast

2016 bln ARS

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Bln AR bln ARS

January 22 19:00 UTC 650614650614m

ARTrade Balance

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Forecast

Previous

-1541 %

January 31 00:00 UTC 638794638794m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 22 19:00 UTC 650614650614m

ARTrade Balance

Actual

Forecast

Previous

-1541 %

January 31 00:00 UTC 638794638794m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 638794638794m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 638794638794m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

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