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Europe Roundup: Sterling slumps amid Brexit talk and political uncertainty, dollar off highs on U.S. tax reform delay concerns, European shares trade in red- Wednesday, November 8th, 2017

Market Roundup

  • EUR/USD 0.11%, USD/JPY -0.32%, GBP/USD -0.27%, EUR/GBP 0.38%
     
  • DXY -0.09%, DAX -0.11%, FTSE 0.03%, Brent -0.19%, Gold 0.41%
     
  • U.S. Commerce Secretary says Trump-Xi talks will address trade imbalances
     
  • France Sept Trade Balance, Eur, SA -4.67B vs -4.19B, forecast -4.8B, revised -4.19B
     
  • Spain Sept Ind Output Cal Adj YY 3.4% vs 1.8%, forecast 3.2%, revised 1.9%
     
  • German advisers want tighter ECB policy, longer Brexit talks
     
  • Further blow to Britain's May as aid minister's future in doubt
     
  • IMF, BOJ member say Japan needs to keep stimulus running
     
  • IMF's Lagarde warns protectionism, now just words, may come to hurt Asia
     
  • Oil steadies as Middle East tensions offset concern over China demand
     
  • Gold up as dollar slips on possible delay in U.S. tax cut plan

Economic Data Ahead

  • (0815 ET/1315 GMT) Canadian Mortgage and Housing Corp will report housing starts for the month of October. The indicator is expected to edge down at a seasonally adjusted annualized rate of 210,000 after rising 217,000 in the previous month.
     
  • (0830 ET/1330 GMT) The Statistics Canada is likely to report that building permits dropped 0.2 percent in September, compared with August's drop of 5.5 percent.
     
  • (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending November 3.
     
  • (1500 ET/2000 GMT) The Reserve Bank of New Zealand will announce its interest rate decision and release monetary policy statement.
     
  • (1850 ET/2350 GMT) Bank of Japan releases Summary of board members' opinions at its Oct. 30-31 policy meeting.
     
  • (1850 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending November 3.
     
  • (1850 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending November 3.
     
  • (1850 ET/2350 GMT) Japan's Ministry of Finance is likely to report that Current Account (N.S.A) surplus narrowed to 2,375.4 billion yen in September from 2,380.4 billion yen in August.
     
  • (1850 ET/2350 GMT) Japan's Customs Office will release Trade Balance (BOP Basis) figures for the month of September. The economy posted a trade surplus of 318.7 billion yen in the earlier month.
     
  • (1850 ET/2350 GMT) Japan's machinery orders are likely to have decreased 1.8 percent for the month of September after posting a decline of 3.4 percent in August.
     

Key Events Ahead

  • (1045 ET/1545 GMT) FedTrade Operation 30-year Fannie Mae / Freddie Mac (max $1.665 bn)
     
  • (1335 ET/1835 GMT) Bank of England Governor Mark Carney speaks at King's College – London
     
  • (1600 ET/2100 GMT) The Reserve Bank of New Zealand Governor gives a press conference.

FX Beat

DXY: The dollar index consolidated within a narrow range as investors’ turned cautious over a possible delay in the implementation of a major corporate tax cut under a crucial U.S. tax reforms plan. The greenback against a basket of currencies traded flat at 94.83, having touched a high of 95.15 the day before, its highest since Oct. 27. FxWirePro's Hourly Dollar Strength Index stood at -23.00 (Neutral) by 1000 GMT.

EUR/USD: The euro rebounded after declining to a 3-1/2 month low in the previous session, as the dollar weakened across the board amid U.S. tax reforms uncertainty and evidence of the U.S. president's waning popularity. The European currency traded 0.1 percent up at 1.1598, having touched a low of 1.1554 on Tuesday; its lowest since July 20. FxWirePro's Hourly Euro Strength Index stood at -147.47 (Highly Bearish) by 1000 GMT. The pair has broken the low of 1.15742 made last week, which confirms further weakness and a dip till 1.1500/1.14235 (38.2% retracement of 1.04833 and 1.20925). On the higher side, minor bullishness can be seen only above 1.1640 (233- H MA) and any break above will take the pair to next level till 1.1720/1.1755.

USD/JPY: The dollar slumped, reversing almost all of its previous session gains, as worries over possible delays to Donald Trump's tax reform plan weighed heavily on market sentiment. The major was trading 0.3 percent down at 113.67, having hit a high of 114.73 on Monday, its highest since Mar. 15. FxWirePro's Hourly Yen Strength Index stood at 154.71 (Highly Bullish) by 1000 GMT. On the lower side, any close below 112.30 (233- day MA) confirms minor weakness, a decline till 111.60 (55- day EMA)/111.13 likely. Any convincing close above 114.50 (161.8% fib) confirms minor bullishness, a jump till 116 likely.

GBP/USD: Sterling declined, extending previous session losses amid growing doubts over Prime Minister Theresa May's ability to deliver a good Brexit deal and on a string of scandals in the ruling Conservative party. The major traded 0.3 percent down at 1.3121, having hit a low of 1.3039 on Friday, its lowest since Oct. 6. FxWirePro's Hourly Sterling Strength Index stood at 46.00 (Neutral) by 1000 GMT. The pair has formed bearish flag pattern in the 4-hour chart and any minor bullishness can be seen only above 1.3210. The near-term resistance is around 1.3180 and any short-term bullish continuation only above 1.3380. On the lower side, near-term major support is around 1.3100 and any violation below will drag it down till 1.30380/1.30270. Against the euro, the pound was trading 0.5 percent down at 88.40 pence, having hit a low of 89.38 pence on Thursday, its lowest since Oct. 26.

USD/CHF: The Swiss franc consolidated near the 1.0000 handle, supported by persisting risk-off market profile. The major trades 0.1 percent down at 0.9987, having touched a high of 1.0037 last month, it’s highest since May. 12. FxWirePro's Hourly Swiss Franc Strength Index stood at 39.05 (Neutral) by 1000 GMT. The near-term support stands at 0.9938 (Oct 30th low) and any break below will drag the pair to next level till 0.9910 (100- 4H MA)/0.9860. The major resistance is around 1.0040 and any break above will take it till 1.0100/1.0174.

AUD/USD: The Australian dollar rallied after falling to an 11-day low the prior day on expectations that domestic interest rates will stay at record lows for a long time yet. The Aussie trades 0.4 percent up at 0.7674 having hit a low of 0.7627 on Tuesday; it’s lowest since Oct. 27. FxWirePro's Hourly Aussie Strength Index stood at -86.92 (Slightly Bearish) by 1000 GMT. On the lower side, the pair should close below 0.7624 for further weakness. Any close below targets 0.7600/0.7550. The near-term resistance is around 0.7685 (55- 4H EMA) and any break above targets 0.7732 (100- 4H MA)/0.7780.

Equities Recap

European shares declined, weighed down by losses in banking stocks, while greenback steadied below an 11-day high touched in the previous session as doubts over tax cuts dented dollar bulls' sentiment.

The pan-European STOXX 600 index edged down 0.2 percent to 393.87 points, while the FTSEurofirst 300 index fell 0.2 percent to 1,549.55 points.

Britain's FTSE 100 trades 0.1 percent lower at 7,508.33 points, while mid-cap FTSE 250 eased 0.1 percent to 20,287.50 points.

Germany's DAX rose 0.01 percent at 13,380.69 points; France's CAC 40 trades 0.2 percent down at 5,472.07 points.

Commodities Recap

Crude oil prices steadied as the overall market remained well supported by OPEC-led supply cuts. International benchmark Brent crude was trading 0.4 percent up at $63.74 per barrel by 1011 GMT, having hit a high of $64.62 the prior day, its highest since June 2015. U.S. West Texas Intermediate was trading 0.3 percent up at $57.07 a barrel, after rising as high as $57.67 on Tuesday, its highest since Jun. 2015.

Gold prices gained, reversing almost all of its previous session losses, as the dollar eased following a media report that suggested a delay in the implementation of a major corporate tax cut under a crucial U.S. tax reforms plan. Spot gold was up 0.5 percent at $1,280.86 per ounce as of 1013 GMT, having touched a one-week low of $1,265.43 on Friday. U.S. gold futures for December delivery gained 0.3 percent to $1,279 an ounce.

Treasuries Recap

The U.S. Treasuries traded tad lower as investors wait to focus on the country’s long-term 10-year auction, scheduled to be held today by 18:00GMT. The yield on the benchmark 10-year Treasury rose 1 basis point to 2.31 percent, the super-long 30-year bond yields also climbed 1 basis point to 2.77 percent and the yield on the short-term 2-year note too traded nearly a basis point higher at 1.63 percent.

The UK gilts traded range-bound as investors refrained from any major trading activity amid a silent trading session that witnessed data of less economic significance. The UK 10-year bond yields, which move inversely to its price, slid 1/2 basis point to 1.22 percent, the yield on 30-year note also remained tad lower at 1.81 percent while the yield on short-term 2-year traded 1 basis point higher at 0.44 percent.

The German bunds remained flat as investors remained sidelined in any major trading activity amid a silent trading session that witnessed data of least economic significance. The German 10-year bond yields, which move inversely to its price, hovered around 0.33 percent, the yield on 30-year note remained tad lower at 1.20 percent and the yield on short-term 2-year traded flat at -0.76 percent.

The New Zealand bonds closed lower as investors shrugged off weak GlobalDairyTrade Price Index data. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 3-1/2 basis points to 2.87 percent, the yield on the 20-year note also surged 3-1/2 basis points to 3.39percent and the yield on short-term 2-year ended 1-1/2 basis points higher at 2.02 percent.

The Japanese bonds traded firmer following solid daily market operations from the Bank of Japan. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell nearly 1 basis point to 0.024 percent, the yield on long-term 40-year also slid 1 basis point to 0.999 percent and the yield on short-term 2-year declined 1-1/2 basis points to -0.201 percent

The Australian bonds traded a little firmer as markets awaited the Statement on Monetary Policy (SoMP) from the Reserve Bank of Australia. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.589 percent, the yield on the long-term 30-year note declined nearly 1 basis point to 3.361 percent and the yield on short-term 2-year remained steady at 1.791 percent.

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November 24 15:30 UTC Released

USECRI Weekly Index*

Actual

145.6 %

Forecast

Previous

145.6 %

November 24 14:45 UTC Released

US1st Half-Mth Infl YY*

Actual

54.6 %

Forecast

Previous

54.6 %

November 27 09:00 UTC 31943194m

ITExport Prices*

Actual

Forecast

Previous

111 %

November 27 09:00 UTC 31943194m

ITImport Prices*

Actual

Forecast

Previous

116.1 %

November 27 14:00 UTC 34943494m

MXTrade Balance, $*

Actual

Forecast

Previous

-1.886 Bln USD

November 27 14:00 UTC 34943494m

MXTrade Balance SA*

Actual

Forecast

Previous

-1.559 Bln USD

November 27 15:30 UTC 35843584m

USDallas Fed mfg bus index

Actual

Forecast

Previous

27.6

November 27 21:00 UTC 39143914m

KRBOK Manufacturing BSI*

Actual

Forecast

Previous

87 Bln BRL

November 28 00:00 UTC 40944094m

BRCentral Govt Balance

Actual

Forecast

Previous

-22.725 Bln BRL

November 28 07:00 UTC 45144514m

DEGDP Growth QQ* Advance

Actual

Forecast

Previous

10.7 %

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