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Europe Roundup: Sterling rises above 1.4300, euro near 3-year peak ahead of ECB monetary policy meet, European shares volatile - Thursday, January 25th, 2018

Market Roundup

  • United Kingdom Jan CBI distributive trades decrease to 12 (forecast 12 )
     
  • Italy Dec flash trade balance non-EU increase to 6.24 bln eu vs previous 4.6 bln eu
     
  • Brazil Jan FGV consumer conf increase to 88.8 vs previous 88.4 (revised from 86.4 )
     
  • United Kingdom Dec UK finance mortgage apps decrease to 36.115 k vs previous 39.507 k
     
  • South Africa Dec PPI mm increase to 0.6 % (forecast 0.6 %) vs previous 0.5 %
     
  • South Africa Dec PPI yy increase to 5.2 % (forecast 5.2 %) vs previous 5.1 %
     
  • Germany Jan IFO expectations decrease to 108.4 (forecast 109.4 ) vs previous 109.5
     
  • Germany Jan IFO current conditions increase to 127.7 (forecast 125.4 ) vs previous 125.4
     
  • Germany Jan IFO business climate increase to 117.6 (forecast 117.1 ) vs previous 117.2
     
  • France's le Maire says U.S. has signalled it is open to dialogue on implementation of tax measures to address European concerns
     
  • Davos- U.K. Chancellor Hammond says EU businesses need access to U.K. Financial services market to drive competitiveness
     
  • France's le Maire says worried about double taxation from U.S. Tax reform
     
  • Davos- U.K. Chancellor Hammond says financial services important part of EU deal
     

Economic Data Ahead

  • (0745 ET/1245 GMT) The European Central Bank will announce its interest rate decision.
     
  • (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 20,000 to a seasonally adjusted 240,000 for the week ended Jan. 19, while continuing claims for the week ended Jan. 12 is expected to decline to 1.925 million from previous 1.952 million.
     
  • (0830 ET/1330 GMT) The U.S. Census Bureau is likely to report that preliminary wholesale inventories rose 0.2 percent in December after posting a gain of 0.8 percent in November.
     
  • (0830 ET/1330 GMT) The United States releases goods trade balance data for the month of December. The economy recorded a trade deficit of $70.0 billion in the previous month.
     
  • (0830 ET/1330 GMT) Statistics Canada is expected to report that retail sales gained 0.7 percent in November after rising 1.5 percent in October. While excluding autos, retail sales are likely to have risen 0.8 percent, after posting similar gains in the previous month.
     
  • (1000 ET/1500 GMT) The U.S. new single-family home sales are likely to decline 7.9 percent to a seasonally adjusted annual rate of 679,000 units in December, from 733,000 units in November.
     
  • (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending January 19.
     
  • (1100 ET/1600 GMT) Federal Reserve Bank of Kansas City issues manufacturing activity index for the month of January. The indicator stood at 21 in the previous month.
     
  • (1830 ET/2330 GMT) Japan's Statistics Bureau will release its National Consumer Price Index for the month of December. The index rose at an annualized rate of 0.6 percent in November.
     

Key Events Ahead

  • (0830 ET/1330 GMT) European Central Bank President releases the monetary policy statement and gives a press conference.
     
  • (1850 ET/2350 GMT) Bank of Japan publishes the minutes of its latest monetary policy meeting.

FX Beat

DXY: The dollar index declined to a 3-year low after U.S. Treasury Secretary Steven Mnuchin said that he was not concerned where the dollar was in the short term. The greenback against a basket of currencies traded 0.2 percent down at 89.08, having touched a low of 88.81 earlier, its lowest since December 2014. FxWirePro's Hourly Dollar Strength Index stood at -184.25 (Highly Bearish) by 1000 GMT.

EUR/USD: The euro rose to a 3-years high as attention turned to whether the European Central Bank can absorb a surging euro at its policy decision. The European currency traded 0.1 percent up at 1.2417, having touched a high of 1.2459 earlier, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at 34.55 (Neutral) by 1000 GMT. Immediate resistance is located at 1.2460, a break above targets 1.2490. On the downside, support is seen at 1.2343 (78.6% retracement of 1.1916 and 1.2459), a break below could drag it lower 1.2252 (61.8% retracement).

USD/JPY: The dollar tumbled to a 4-1/2 month low as the greenback slumped to 3-year lows on comments from US Treasury Secretary Mnuchin. The major was trading 0.2 percent down at 109.06, having hit a low of 108.73 earlier, its lowest since Sept 11. FxWirePro's Hourly Yen Strength Index stood at 50.18 (Bullish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. unemployment benefit claims, goods trade balance and new home sales figures for further momentum. Immediate resistance is located at 109.33 (78.6% retracement of 111.49 and 108.73), a break above targets 109.79 (61.8% retracement). On the downside, support is seen at 108.60, a break below could take it near 108.00.

GBP/USD: Sterling rallied to its highest since the vote to exit the European Union in June 2016, amid persistent broad-based US dollar weakness. The major traded 0.2 percent up at 1.4256, having hit a high of 1.4328 earlier, it’s highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at 139.46 (Highly Bullish) by 1000 GMT. Immediate resistance is located at 1.4370, a break above could take it near 1.4400. On the downside, support is seen at 1.4142 (78.6% retracement), a break below targets 1.3996 (61.8% retracement of 1.3458 and 1.4328). Against the euro, the pound was trading 0.1 percent up at 86.98 pence, having hit a high of 86.87 pence earlier, it’s highest since Jun. 2017.

USD/CHF: The Swiss franc advanced to a 2-1/2 year high as the greenback declined to a 3-year low after U.S. Treasury Secretary Steven Mnuchin said he welcomed US dollar’s weakness. The major trades 0.3 percent down at 0.9448, having touched a low of 0.9390 earlier, it’s lowest since August. 2015. FxWirePro's Hourly Swiss Franc Strength Index stood at 99.16 (Slightly Bullish) by 1000 GMT. On the higher side, near-term resistance is around 0.9454 (78.6% retracement of 0.9666 and 0.9390) and any break above will take the pair to next level till 0.9500 (61.8% retracement). The near-term support is around 0.9360 and any close below that level will drag it to next level till 0.9300.

Equities Recap

European shares edged up, reversing early session gains, while the euro rose to a 3-years high ahead of the European Central Bank monetary policy decision.

The pan-European STOXX 600 index gained 0.01 percent to 400.80 points, while the FTSEurofirst 300 index edged up 0.05 percent to 1,575.47 points.

Britain's FTSE 100 trades 0.1 percent higher at 7,652.94 points, while mid-cap FTSE 250 fell 0.3 percent to 20,484.37 points.

Germany's DAX fell 0.2 percent at 13,395.39 points; France's CAC 40 trades 0.4 percent up at 5,515.39 points.

Commodities Recap

Crude oil prices rallied to its highest since 2014 as the greenback continued to weaken and crude inventories in the United States fell for a 10th straight week, amid ongoing supply cuts by OPEC and Russia. International benchmark Brent crude was trading 0.01 percent up at $70.71 per barrel by 1027 GMT, having hit a high of $71.17 earlier, its highest since Dec. 2014. U.S. West Texas Intermediate was trading 0.2 percent up at $65.98 a barrel, after rising as high as $66.41 earlier, its highest since Dec. 2014.

Gold prices rose to their highest since August 2016, as the U.S. dollar hit three-year lows after comments by U.S. Treasury secretary Steven Mnuchin. Spot gold gained 0.1 percent to $1,359.66 per ounce by 1029 GMT, after hitting its highest since Aug. 3, 2016 at $1,365.94. U.S. gold futures were up 0.3 percent at $1,359.70 per ounce.

Treasuries Recap

The German bunds traded narrowly mixed after the country’s business confidence rose unexpectedly in January, albeit at a slightly higher pace. Also, investors are now awaiting the European Central Bank’s (ECB) monetary policy decision, scheduled to be unveiled today by 12:45GMT. The German 10-year bond yields, which move inversely to its price, traded flat at 0.59 percent, the yield on 30-year note also slipped nearly 1 basis point to 1.32 percent and the yield on short-term 2-year traded tad higher at -0.58 percent.

The UK gilts remained nearly flat as investors wait to watch the country’s fourth-quarter gross domestic product (GDP), scheduled to be released on January 26, besides the Bank of England (BoE) Governor Mark Carney’s speech, due on the same day for further direction in the debt market. The yield on the benchmark 10-year gilts, hovered around 1.40 percent, the super-long 30-year bond yields climbed nearly 1/2 basis point to 1.89 percent and the yield on the short-term 2-year traded flat at 0.58 percent.

The Japanese government bonds edged lower ahead of the Bank of Japan’s (BoJ) January monetary policy meeting minutes and the country’s national consumer price inflation index (CPI) for the month of December, scheduled to be released today by 23:50GMT and 23:30GMT respectively. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1 basis point to 0.08 percent, the yield on the long-term 30-year note traded tad higher at 0.83 percent and the yield on short-term 2-year steadied at -0.13 percent.

The New Zealand government bonds ended Thursday’s session on a slightly higher note after the country’s consumer price-led inflation index (CPI) for the fourth quarter of this year disappointed market expectations, flocking investors into safe-haven assets. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1/2 basis point to 2.93 percent, the yield on 20-year also remained tad lower at 3.42 percent while the yield on short-term 2-year slumped 6 basis points to 1.98 percent.

The Australian bonds slumped during early Asian session Thursday, tracking a similar movement in the U.S. counterpart after Treasury Secretary Steven Mnuchin volunteered that a weaker dollar would support America’s trade in the global perspective. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 2 basis points to 2.83 percent, the yield on the long-term 30-year note surged nearly 3 basis points to 3.47 percent and the yield on short-term 2-year traded flat at 2.09 percent.

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February 19 13:00 UTC Released

RUReal Wages YY

Actual

6.2 %

Forecast

4.6 %

Previous

4.6 %

February 19 13:00 UTC Released

RURetail Sales YY

Actual

2.8 %

Forecast

3 %

Previous

3.1 %

January 31 00:00 UTC 2819328193m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 2819328193m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 22 19:00 UTC 4001340013m

ARTrade Balance

Actual

Forecast

Previous

-1541 %

January 31 00:00 UTC 2819328193m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 22 19:00 UTC 4001340013m

ARTrade Balance

Actual

Forecast

Previous

-1541 %

January 31 00:00 UTC 2819328193m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 2819328193m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 2819328193m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

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