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Europe Roundup; Sterling slumps ahead of BoE Carney's speech, euro steady on current account surplus, European shares volatile –Monday, February 19, 2018

Market Roundup

  • Eurozone Dec current account sa, eur decrease to 29.9 bln eu vs previous 35 bln eu (revised from 32.5 bln eu)
     
  • Eurozone Dec current account nsa,eur increase to 45.8 bln eu vs previous 40.1 bln eu (revised from 37.8 bln eu)
     
  • Australian foreign minister bishop says if UK were to stay in EU customs union, would appear to preclude progress in UK-Australia trade deal
     
  • S. Korea's president moon asks relevant ministries to act sternly regarding trade talks with the U.S.
     
  • White House says Mueller indictment of Russians shows there was "no collusion" between Trump campaign, Russia
     

Economic Data Ahead

  • (1645 ET/2145 GMT) The Statistics New Zealand will report its producer price index input and output data for the fourth quarter. PPI input rose 1.0 percent and output also increased 1.0 percent during the third quarter.

Key Events Ahead

  • (1345 ET/1845 GMT) Bank of England Governor Mark Carney speech.
     
  • (1715 ET/2215 GMT) The Reserve Bank of Australia Assistant Governor Michele Bullock's speech.

FX Beat

DXY: The dollar index slightly edged up from 3-year lows hit in the previous session after the U.S. 10-year Treasuries yield closed at 2.87 percent on Friday, having touched a four-year high of 2.944 percent. The greenback against a basket of currencies traded 0.1 percent up at 89.16, having touched a low of 88.25 on Friday, its lowest since Dec. 2014. FxWirePro's Hourly Dollar Strength Index stood at -100.92 (Highly Bearish) by 1000 GMT.

EUR/USD: The euro edged up after falling from a 3-year high in the previous session, following data showing Eurozone's adjusted current account surplus narrowed slightly in December, moving broadly in line with its recent trend. The economy recorded an adjusted surplus of 29.9 billion euros in December, compared with 35.0 billion euros a month earlier. The European currency traded 0.05 percent up at 1.2413, having touched a high of 1.2555 on Friday, its highest since Dec 2014. FxWirePro's Hourly Euro Strength Index stood at -71.32 (Slightly Bearish) by 1000 GMT. Immediate resistance is located at 1.2450, a break above targets 1.2500. On the downside, support is seen at 1.2365 (21-DMA), a break below could drag it lower 1.2245 (Feb 7 Low).

USD/JPY: The dollar rose, extending previous session's rebound on speculation that the Federal Reserve will hike interest rates at its next policy meeting in March. The major was trading 0.3 percent up at 106.58, having hit a low of 105.55 on Friday, its lowest since Nov. 2016. FxWirePro's Hourly Yen Strength Index stood at 0.5 (Neutral) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, as the U.S. remained closed on account of Presidents Day. Immediate resistance is located at 107.45 (61.8% retracement of 110.48 and 105.74), a break above targets 108.02 (50.0% retracement). On the downside, support is seen at 105.40, a break below could take it lower 105.05.

GBP/USD: Sterling declined, extending previous session losses, as investors turned cautious ahead of key wages data due later in the week that could give clues to the pace of monetary tightening from the Bank of England. The major traded 0.2 percent down at 1.4011, having hit a high of 1.4144 on Friday, it’s highest since Feb 5. FxWirePro's Hourly Sterling Strength Index stood at 91.53 (Slightly Bullish) by 1000 GMT. Immediate resistance is located at 1.4150 (Feb 5 High), a break above could take it near 1.4278 (Feb 2 High). On the downside, support is seen at 1.3971 (5-DMA), a break below targets 1.3937 (10-DMA). Against the euro, the pound was trading 0.2 percent down at 88.59 pence, having hit a low of 89.19 pence on Wednesday, it’s lowest since Jan. 12.

USD/CHF: The Swiss franc eased to a 5-day low as the greenback rebounded from 3-year lows against a basket of currencies. The major trades 0.1 percent up at 0.9276, having touched a low of 0.9187 on Friday, it’s lowest since Jun 2015. FxWirePro's Hourly Swiss Franc Strength Index stood at -6.95 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 0.9300 (50.0% retracement of 0.9406 and 0.9187) and any break above will take the pair to next level till 0.9339 (10-DMA). The near-term support is around 0.9250 and any close below that level will drag it lower 0.9200.

Equities Recap

European shares reversed early session gains, while the greenback rebounded from 3- year lows against a basket of currencies on speculation that the Fed will hike interest rates at its next policy meeting in March.

The pan-European STOXX 600 index declined 0.1 percent to 380.23 points, while the FTSEurofirst 300 index eased 0.1 percent to 1,489.60 points.

Britain's FTSE 100 trades 0.05 percent higher at 7,296.59 points, while mid-cap FTSE 250 gained 0.05 percent to 19,742.46 points.

Germany's DAX rose 0.05 percent at 12,452.51 points; France's CAC 40 trades 0.05 percent up at 5,281.60 points.

Commodities Recap

Crude oil prices rallied to hit their highest level in nearly two weeks, as worries grew over tensions in the Middle East. International benchmark Brent crude was trading 0.4 percent up at $65.15 per barrel by 0912 GMT, having hit a high of $65.41 earlier, its highest since Feb. 8. U.S. West Texas Intermediate was trading 0.9 percent up at $62.22 a barrel, after rising as high as $62.52 earlier, its strongest since Feb. 8.

Gold prices edged down as the greenback rebounded from a 3-year low against a basket of currencies. Spot gold declined 0.1 percent to $1,346.85 an ounce by 0920 GMT, after touching its highest level since Jan. 25 at $1,361.62 on Friday. U.S. gold futures slipped 0.2 percent to $1,353.10 per ounce.

Treasuries Recap

The German bunds slumped ahead of the country’s ZEW economic sentiment index and the manufacturing PMI for the month of February, scheduled to be released on February 20 and 22 by 10:00GMT and 08:30GMT respectively. The German 10-year bond yields, which move inversely to its price, jumped 3 basis points to 0.73 percent, the yield on 30-year note also surged nearly 3 basis points to 1.37 percent and the yield on short-term 2-year traded 1 basis point higher at -0.49 percent.

The Japanese government bonds traded tad lower, following better-than-expected trade balance data for the month of January, released overnight, in contrast to the Reuters Tankan manufacturers’ survey for this month, which showed a decline in the figures. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.06 percent, the yield on the long-term 30-year note remained flat at 0.79 percent and the yield on short-term 2-year traded tad lower at -0.15 percent.

The Australian bonds gained on the first day of the trading week after the U.S. 10-year Treasury yield retreats from 4-year high. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 2 basis points to 2.879 percent, the yield on the long-term 30-year note also declined 2 basis points to 3.510 percent and the yield on short-term 3-year down 1/2 basis point to 2.131 percent.

The New Zealand 10-year government bonds closed narrowly mixed Monday as investors wait to watch the country’s GlobalDairyTrade price auction, scheduled to be held on February 20 and the retail sales for the fourth quarter of 2017, due on February 22 by 21:45GMT. 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 2.99 percent, the yield on 20-year hovered around 3.50 percent and the yield on short-term 2-year closed steady at 1.88 percent.

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