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Europe Roundup: Sterling recovers from recent lows, euro range bound before Jackson Hole, European shares volatile - August, Monday 21st, 2017

Market Roundup

  • EUR/USD -0.16%, USD/JPY -0.15%, GBP/USD +0.02%, EUR/GBP -0.19%
     
  • DXY 0.09%, DAX -0.4%, FTSE -0.16%, Brent -0.42%, Gold +0.28%
     
  • German growth could top expectations this year: Bundesbank
     
  • U.S., S. Korea begin computer-simulated drills amid N. Korea tension
     
  • Oil prices fall after rally encourages profit-taking
     
  • Gold little changed as investors focus on geopolitics, c. bank meetings

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 July. The index stood at 0.13 in the prior month.
     
  • (0830 ET/1230 GMT) Statistics Canada will release its wholesale trade figures for the month of June. The indicator is likely to have decreased by 0.4 percent, after unexpectedly rising 0.9 percent in May.

Key Events Ahead

  • (1145 ET/1545 GMT) Fed Trade operation 30-year Fannie Mae / Freddie Mac (max $1.65 bn)

FX Beat

DXY: The dollar eased, extending losses versus most of its major peers on concerns that White House personnel changes will impair President Donald Trump's ability to pass tax reform and stimulus measures. The greenback against a basket of currencies traded 0.04 percent up at 93.38, having touched a high of 94.15 on Wednesday, it’s highest since July 26. FxWirePro's Hourly Dollar Strength Index stood at 14.46 (Neutral) by 1000 GMT.

EUR/USD: The euro traded within a narrow range amid a renewed risk-off wave triggered by tumbling European equities. The European currency traded flat at 1.1763, having touched a low of 1.1662 on Wednesday, its lowest since Jul. 27. FxWirePro's Hourly Euro Strength Index stood at -3.20 (Neutral) by 1000 GMT. On the lower side, near-term support is around 1.16575 (23.6% retracement of 1.08930 and 1.19103) and any break below will drag the pair till 1.15985/1.1500. The near-term resistance is around 1.1850 and any break above will take it till 1.19103 (Aug 8th 2017)/1.19391 (1.13% retracement of 1.19103 and 1.16880)/1.1200.

USD/JPY: The dollar declined, extending losses for the fourth consecutive session, as investors looked ahead to the U.S. Federal Reserve's annual central banking symposium in Jackson Hole later in the week. The major was trading 0.1 percent down at 109.06, having hit a low of 108.60 the prior day, its lowest since Apr. 19 2016. FxWirePro's Hourly Yen Strength Index stood at 84.51 (Slightly Bullish) by 1000 GMT. On the lower side, any break below 108 confirms minor weakness, a decline till 106 likely. The pair is facing minor resistance at 110.55 (21- day EMA) and any break above will take it till 111.30 (100- day MA).

GBP/USD: Sterling staged a solid recovery, as the risk-off trades stabilized amid a minor-recovery seen in the European stocks and Treasury yields. Sterling traded 0.2 percent up at 1.2892, having hit a low of 1.2831 on Friday, its lowest since July 12. FxWirePro's Hourly Sterling Strength Index stood at -100.17 (Highly Bearish) by 1000 GMT. On the higher side, 1.2978 (21- day EMA) will be acting major resistance and any convincing break above will take the pair slightly till 1.3050/1.3082/1.3105 (61.8% retracement of 1.32680 and 1.28315). The near-term support is around 1.28110 (Jul 12th low) and any break below will drag it till 1.27763 (38.2% fibo)/1.27000. Against the euro, the pound was trading 0.1 percent at 91.25 pence, having hit a 10-month low of 91.49 the day before.

USD/CHF: The Swiss franc declined 0.6 percent, as risk sentiment slightly improved across the market. The major trades 0.6 percent up at 0.9664, having touched a high of 0.9765 on Wednesday, it’s highest since Aug. 8. FxWirePro's Hourly Swiss Franc Strength Index stood at 19.92 (Neutral) by 1000 GMT. The pair is facing near-term support at 0.95800 and any close below will drag the pair till 0.9550/ 0.9500/ 0.94370. On the higher side, upside capped at 0.9783 (38.2% retracement of 1.03432 and 0.94385) and any break above will take it till 0.9845/0.9900.

AUD/USD: The Australian dollar rose amid prevalent positive sentiment around commodity space, especially copper. The Aussie trades 0.1 percent at 0.7934, having hit a low of 0.7807on Tuesday, it’s weakest since July 18. FxWirePro's Hourly Aussie Strength Index stood at 15.46 (Neutral) by 1000 GMT. On the lower side, near-term support is around 0.7800 and any break below will drag the pair till 0.7760 (61.8% fibo)/0.7688 (89- day EMA). The pair’s near-term resistance is around 0.8070 and any break above targets 0.8100/0.8150.

Equities Recap

European shares traded in a volatile market, while the greenback eased amid a renewed risk-off wave triggered by concerns over U.S. President Donald Trump's ability to fulfill his economic agenda.

The pan-European STOXX 600 index rallied 0.06 percent to 374.42 points, while the FTSEurofirst 300 index climbed 0.1 percent to 1,470.60 points.

Britain's FTSE 100 trades 0.02 percent up at 7,425.23 points, while mid-cap FTSE 250 gained 0.1 percent to 19,647.03 points.

Germany's DAX fell 0.2 percent at 12,142.55 points; France's CAC 40 trades 0.2 percent lower at 5,104.81 points.

Commodities Recap

Crude oil prices declined after rising to an over 1-week high in the previous session, as rising U.S. output weighed on hopes the market will rebalance. International benchmark Brent crude was trading 0.5 percent down at $52.57 per barrel by 1024 GMT, having hit a high of $52.93 on Friday, its strongest since Aug. 8. U.S. West Texas Intermediate was trading 0.3 percent up at $48.63 a barrel, after rising as high as $48.71 the prior session, its highest since Aug. 14.

Gold prices rose, as investors sought further direction after a week of geopolitical uncertainty in the United States and Europe and ahead of a meeting of central bankers later this week. Spot gold edged 0.1 percent higher at $1,287.45 an ounce by 1048 GMT, having touched a high at $1,300.80 per ounce, its highest since Nov. U.S. gold futures for December delivery were flat at $1,291.70 per ounce.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.192 percent higher by 0.005 bps, while 5-year yield was 0.007 bps up at 1.7688 percent.

The Greek government bond yields dipped, with the short-dated Greek government bond yields hitting 3.25 percent at one stage, close to their lowest since 2009, a level hit earlier this month. The yield on Greece's 10-year government bond dropped 5 basis points in early trade to 5.58 percent before trading flat.

The Japanese government bonds were steady on Monday, underpinned by firmer U.S. Treasuries and weaker Japanese stocks. The 10-year cash JGB yield was flat at 0.035 percent, while the September 10-year JGB futures contract was up 0.07 point in afternoon trading at 150.78, touching its highest intraday levels since June 7. The benchmark 10-year U.S. Treasuries yield last stood at 2.199 percent. In the superlong zone, the 20-year JGB yield edged down half a basis point to 0.555 percent, while the 30-year JGB yield was down half a basis point at 0.845 percent.

The Australian government bond futures slipped, with the three-year bond contract down 1 tick at 98.040. The 10-year contract fell 1.50 ticks to 97.370. The New Zealand government bonds eased, sending yields 3 basis points higher.

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