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Europe Roundup: Sterling slumps amid renewed Brexit uncertainty, dollar consolidates on U.S. government shutdown possibility, European shares plunge - Wednesday, December 6th, 2017

Market Roundup

  • EUR/USD 0.02%, USD/JPY -0.38%, GBP/USD -0.47%, EUR/GBP 0.48%
     
  • DXY -0.06%, DAX -1.02%, FTSE -0.14%, Brent -0.65%, Gold 0.12%
     
  • Germany Industrial Orders MM Oct, 0.5%, -0.3% forecast, 1.0% previous
     
  • Swiss CPI rises 0.8% y/y in Nov vs 0.9% forecast
     
  • No Brexit deal this week, Sun political editor cites DUP source as saying
     
  • DUP declines to comment on whether Brexit border deal possible by end of week
     
  • Britain's May working towards EU summit, progress made in talks – spokesman
     
  • ECB should plan for end of bond buys: Mersch
     
  • Britain has not formally assessed impact of Brexit on economy - Brexit minister
     
  • BOJ's Masai advocates staying with 'powerful easing', warns on side-effects
     
  • China Nov data to show economy facing pressure from debt, pollution crackdowns
     
  • Israel's shekel dips vs dollar on fears over US Jerusalem decision
     
  • Oil falls after rise in US fuel stocks; doubt grows over global growth
     
  • Gold recovers from 2-month low as dollar weakens

Economic Data Preview

  • (0815 ET/1315 GMT) Payrolls processor ADP releases U.S. employment report for the month of November. The report is expected to show that private employers added 185,000 jobs as compared with 235,000 jobs in October.
     
  • (0830 ET/1330 GMT) The U.S. Labor Department is likely to report that nonfarm productivity edged up 3.3 percent in the third-quarter, from 3.0 percent in the previous quarter.
     
  • (0830 ET/1330 GMT) The U.S. Labor Department will release labor costs report for the third-quarter. The indicator is expected to nudge up to 0.2 percent after rising 0.5 percent in the previous month. 
     
  • (1000 ET/1500 GMT) The Investor's Business Daily (IBD)/ TechnoMetrica Institute of Policy and Politics (TIPP) will release U.S. Economic Optimism index for the month of December. The indicator rose to 53.6 in November.
     
  • (1000 ET/1500 GMT) Bank of Canada will meet to announce its benchmark interest rate, where it is expected to hold interest rates at 1.00 percent.
     
  • (1030 ET/1530 GMT) The Energy Information Administration reports its Crude Oil Stocks for the week ending December 1.
     
  • (1700 ET/2200 GMT) Brazil's central bank will announce its interest rate and it is widely expected to cut the benchmark Selic rate by 50 basis points to 7 percent.
     
  • (1730 ET/ 2230 GMT) The Australian Industry Group (AiG) releases its Performance of Construction Index for the month of November. The index stood at 53.2 in the month of October.
     
  • (1850 ET/2350 GMT) Japan releases Foreign Exchange Reserves report for the month of November.
     
  • (1850 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending December 1.
     
  • (1850 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending December 1.

Key Events Ahead

  • (0845 ET/1345 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $1.515 bn)
  • (1045 ET/1545 GMT) FedTrade operation 15-year Fannie Mae / Freddie Mac (max $565 mn)
     

FX Beat

DXY: The dollar index consolidated within narrow ranges as investors refrained from taking big positions on concerns about a possible U.S. government shutdown. The greenback against a basket of currencies traded flat at 93.34, having touched a high of 93.51 on Thursday, its highest since Nov. 22. FxWirePro's Hourly Dollar Strength Index stood at 22.20 (Neutral) by 1000 GMT.

EUR/USD: The euro held firm after slumping to a 2-week low in the previous session, as the greenback weakened on concerns over the progress of a U.S. tax reform plan and chances of a government shutdown. The European currency traded 0.1 percent up at 1.1834, having touched a low of 1.1800 on Tuesday, its lowest since Nov. 22. FxWirePro's Hourly Euro Strength Index stood at -27.43 (Neutral) by 1000 GMT. The pair is facing resistance at 1.19615 (Nov 27th high) and any break above will take it to next level till 1.2000/1.2090. On the lower side, near-term support is around 1.1800 and any break below will drag it to next level till 1.1755/1.1700.

USD/JPY: The dollar plunged to a 5-day low as the possibility of a U.S. government shutdown loomed, if lawmakers failed to reach a budget accord this week. The government funding is set to expire on Friday. The major was trading 0.5 percent down at 112.07, having hit a low of 111.99 earlier, its lowest since Dec. 1. FxWirePro's Hourly Yen Strength Index stood at 84.71 (Slightly Bullish) by 1000 GMT. On the lower side, any close below 111 confirms minor weakness, a decline till 110/108.15 likely. Any convincing close above 113.35 (Nov 16th, 2017 high) will take the pair to next level till 114/115 likely.

GBP/USD: Sterling slumped to a 1-week trough as growing uncertainty over the progress on Brexit negotiations weighed heavily on the British pound. UK’s PM Theresa May is expected to meet with EU’s Juncker in the near term in order to make further progress in the negotiations and consequently clear the way for both parties to start the trade talks towards year-end. Sterling traded 0.5 percent down at 1.3370, having hit a low of 1.3361 earlier, it’s lowest since Nov. 29. FxWirePro's Hourly Sterling Strength Index stood at -155.92 (Highly Bearish) by 1000 GMT. The pair was facing strong resistance at 1.3550 and any convincing break above will take it to next level till 1.3600/1.3700 level. On the lower side, near-term support is around 1.3370 and any break below will drag it to next level till 1.3300/1.3230/1.3175. Against the euro, the pound was trading 0.5 percent down at 88.41 pence, having hit a high of 87.55 pence on Monday, it’s highest since Nov. 1.

USD/CHF: The Swiss franc declined to 2-week lows after data showed domestic consumer price index declined 0.1 percent in November after rising 0.1 percent in the previous month, while year-on-year it rose to 0.8 percent from 0.7 percent, but below estimates of 0.9 percent. The major trades 0.2 percent up at 0.9885, having touched a high of 0.9887 earlier, it’s highest since Nov. 22. FxWirePro's Hourly Swiss Franc Strength Index stood at -112.87 (Highly Bearish) by 1000 GMT. The pair is facing strong resistance around 0.9888 (233- 4H MA) and any break above will take it to next level till 0.9945/1.000. On the lower side, major support stands at 0.9705 (Oct 13th, 2017 low) and any break below will drag it till 0.9655 (61.8% fibo)/0.9600.

AUD/USD: The Australian dollar eased after rising for three consecutive sessions following the release of disappointing domestic third quarter GDP. The Aussie trades 0.2 percent down at 0.7588, having hit a high of 0.7653 the day before; it’s highest since Nov. 13. FxWirePro's Hourly Aussie Strength Index stood at -42.69 (Neutral) by 1000 GMT. On the lower side, the near term support is around 0.7530 and any broke below will drag the pair till 0.7500/0.7435. The near-term resistance is around 0.7650 (trendline resistance) and any break above targets 0.7680/0.7730/0.7780.

Equities Recap

European shares tumbled, dragged lower by tech and mining stocks, while the greenback consolidated within narrow ranges on concerns about a possible U.S. government shutdown.

The pan-European STOXX 600 index declined 0.5 percent to 384.66 points, while the FTSEurofirst 300 index fell 0.6 percent to 1,510.71 points.

Britain's FTSE 100 trades 0.1 percent lower at 7,318.63 points, while mid-cap FTSE 250 declined 0.5 percent to 19,777.35 points.

Germany's DAX eased 0.9 percent at 12,930.86 points; France's CAC 40 trades 0.5 percent down at 5,348.30 points.

Commodities Recap

Crude oil prices declined as refined product inventories in the United States rose in what the market interpreted as a sign of lacklustre demand. International benchmark Brent crude was trading 0.2 percent down at $62.53 per barrel by 0952 GMT, having hit a low of $62.12 on Tuesday, its lowest since Nov. 21. U.S. West Texas Intermediate was trading 0.4 percent lower at $57.27 a barrel, after rising as high as $58.86 on Friday, its highest since Nov. 27.

Gold prices edged up from a two-month low touched in the previous session, as the dollar weakened on concerns over the progress of a U.S. tax reform plan and chances of a government shutdown. Spot gold rose 0.2 percent to $1,268.22 an ounce by 0954 GMT after hitting its lowest since Oct. 6 at $1260.86 on Tuesday. U.S. gold futures were up 0.5 percent at $1,271.10.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.340 percent lower by 0.016 bps, while 5-year yield was 0.021 bps up at 2.129 percent.

The German 10-year bond yields traded 0.011 bps lower at 0.313 percent and the yield on short-term 2-year traded 0.03 basis point down at -0.736 percent.

The yield on the UK benchmark 10-year gilts fell 0.018 basis points to 1.239 percent, while the yield on the short-term 2-year traded 0.08 basis points higher at 0.503 percent.

The Japanese government bonds were steady, underpinned by slumping equities. The benchmark 10-year cash JGB yield was flat on the day at 0.055 percent, and 10-year JGB futures finished up 0.04 point at 150.91. The 20-year yield was flat at 0.580 percent, while the 30-year yield rose half a basis point to 0.835 percent.

The Australian government bond futures bounced, with the three-year bond contract up 4.5 ticks at 98.020. The 10-year contract rose 7 ticks to 97.4550, leaving cash yields a slim 18 basis points above comparable U.S. debt. The New Zealand government bonds gained, sending yields 5.5 basis points lower at the long end of the curve.

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2017-12-18 08:05:21
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2017-12-18 08:01:28
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2017-12-18 08:00:58
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December 18 01:30 UTC Released

CNChina House Prices YY*

Actual

5.1 %

Forecast

Previous

5.4 %

December 18 00:30 UTC Released

AUNew Motor Vehicle Sales m/m*

Actual

0.1 %

Forecast

Previous

January 9 11:00 UTC 3181531815m

BRRetail Sales MM*

Actual

Forecast

0.35 %

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January 9 11:00 UTC 3181531815m

BRRetail Sales YY*

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Forecast

3.20 %

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January 9 11:00 UTC 3181531815m

BRRetail Sales YY*

Actual

Forecast

3.20 %

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January 9 11:00 UTC 3181531815m

BRRetail Sales YY*

Actual

Forecast

3.20 %

Previous

January 9 11:00 UTC 3181531815m

BRRetail Sales MM*

Actual

Forecast

0.35 %

Previous

January 9 11:00 UTC 3181531815m

BRRetail Sales YY*

Actual

Forecast

3.20 %

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December 12 09:30 UTC 85968596m

GBRPIX YY

Actual

Forecast

Previous

4.2 %

December 12 09:30 UTC 85968596m

GBPPI Input Prices MM NSA

Actual

Forecast

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1 %

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