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Europe Roundup: Sterling slumps on renewed Brexit fears, greenback rises over 1-week peak amid intensifying U.S.-China trade tensions, European shares tumble - Tuesday, November 27th, 2018

Market Roundup:

  • United Kingdom Nov 2018 CBI distributive trades increase to 19 balance (forecast 10 balance) vs previous 5 balance
     
  • Italy Nov 2018 consumer confidence decrease to 114.8 (forecast 115.9 ) vs previous 116.5 (revised from 116.6 )
     
  • Italy Nov 2018 mfg business confidence decrease to 104.4 diff.idx (forecast 104.1 diff.idx) vs previous 104.9 diff.idx
     
  • France Nov 2018 consumer confidence decrease to 92 balance (forecast 94 balance) vs previous 95 balance
     

Economic Data Ahead

  • (0900 ET/1400 GMT) The S&P/Case-Shiller is expected to report that U.S. home price index of 20 metropolitan areas rose at an annualized rate of 5.3 percent in September, after posting a gain of 5.5 percent in the previous month.
     
  • (0900 ET/1400 GMT) The Federal Housing Finance Agency releases its housing price index for the month of September. The index gained 0.3 percent in October.
     
  • (1000 ET/1500 GMT) U.S. consumer confidence index is expected to show a reading of 135.5 in November, compared to 137.9 in October.
     
  • (1630 ET/2130 GMT) API reports its weekly crude oil stock.
     

Key Events Ahead

  • (0830 ET/1330 GMT) Federal Reserve Vice Chairman Richard Clarida speaks on "Data Dependence and U.S. Monetary Policy" before the Clearing House 2018 Annual Conference in New York
     
  • (1100 ET/1600 GMT) Keynote speech by ECB board member Yves Mersch at Werkstattgesprache "Nachhaltigkeit wird Mainstream" in Frankfurt, Germany
     
  • (1430ET/1930 GMT) Federal Reserve Bank of Chicago President Charles Evans, Federal Reserve Bank of Atlanta President Raphael Bostic and Federal Reserve Bank of Kansas City President Esther George participate in a panel before the Clearing House 2018 Annual Conference in New York
     
  • (1500 ET/2000 GMT) Reserve Bank of New Zealand releases half-yearly financial stability report in Wellington
     

FX Beat

DXY: The dollar index surged after U.S. President Donald Trump stated that he is likely to move ahead with raising tariffs on $200 billion in Chinese imports to 25 percent from the current 10 percent. The greenback against a basket of currencies trades 0.1 percent up at 97.19, having touched a high of 97.28 earlier, its highest since Nov 15. FxWirePro's Hourly Dollar Strength Index stood at 102.92 (Highly Bullish) by 1000 GMT.

EUR/USD: The euro slumped to a near 2-week low after data showed French consumer confidence fell in November to its lowest level since February 2015, indicating sluggishness in the euro zone's second-biggest economy. The European currency traded 0.1 percent down at 1.1315, having touched a low of 1.1305, its lowest since Nov. 15. FxWirePro's Hourly Euro Strength Index stood at -71.86 (Bearish) by 1000 GMT. Immediate resistance is located at 1.1387 (October 30 High), a break above targets 1.1446 (November 8 High). On the downside, support is seen at 1.1270 (November 15 Low), a break below could drag it till 1.1216 (November 13 Low).

USD/JPY: The dollar trimmed gains after rising to an over 1-week peak, as investors turned cautious ahead of a G20 meeting in Buenos Aires on Nov.30, where U.S. President Donald Trump and Chinese President Xi Jinping are likely to discuss trade. The major was trading flat at 113.58, having hit a high of 113.66, its highest since November 15. FxWirePro's Hourly Yen Strength Index stood at -35.04 (Neutral) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. Housing Price Index and speeches from Fed officials. Immediate resistance is located at 113.81 (November 7 High), a break above targets 114.14 (November 13 High). On the downside, support is seen at 113.07 (November 5 Low), a break below could take it lower 112.64 (November 16 Low).

GBP/USD: Sterling slumped towards a 2-week low after one of British Prime Minister Theresa May's lawmakers said he will not back her Brexit deal. Moreover, comments from U.S. President Donald Trump that a Brexit deal could hamper trade ties with the United States dented the bid tone around the British pound. The major traded 0.4 percent down at 1.2751, having hit a high of 1.2926 on Thursday; it’s highest since November 15. FxWirePro's Hourly Sterling Strength Index stood at -96.34 (Slightly Bearish) 1000 GMT. Immediate resistance is located at 1.2946 (November 12 High), a break above could take it near 1.2990 (October 24 High). On the downside, support is seen at 1.2723 (November 14 Low), a break below targets 1.2695 (October 30 Low). Against the euro, the pound was trading 0.3 percent down at 88.68 pence, having hit a high of 88.35 earlier, it’s highest since Nov. 16.

USD/CHF: The Swiss franc fell to a 1-week low as the greenback rallied, while investors awaited possible cues from the Federal Reserve about policy direction. The major trades 0.1 percent up at 0.9998, having touched a high of 1.0003; it’s highest since Nov. 19. FxWirePro's Hourly Swiss Franc Strength Index stood at -59.05 (Bearish) by 1000 GMT. On the higher side, near-term resistance is around 1.0026 (Oct. 26 High) and any break above will take the pair to next level till 1.0050 (Nov. 7 High). The near-term support is around 0.9952 (October 26 Low), and any close below that level will drag it till 0.9897 (October 17 Low).

Equities Recap

European shares slumped as a new threat by Washington to impose tariffs on more Chinese imports weighed on investor sentiment.

The pan-European STOXX 600 index plunged 0.2 percent at 357.73 points, while the FTSEurofirst 300 index declined 0.2 percent to 1,409.54 points.

Britain's FTSE 100 trades 0.2 percent down at 7,024.60 points, while mid-cap FTSE 250 declined 0.3 percent to 18,668.89 points.

Germany's DAX fell 0.1 percent at 11,342.72 points; France's CAC 40 trades 0.1 percent lower at 4,993.33 points.

Commodities Recap

Crude oil prices edged up, as Saudi Arabia tried to persuade other exporters to agree output cuts ahead of an OPEC meeting next week. International benchmark Brent crude was trading 0.5 percent up at $60.86 per barrel by 1023 GMT, having hit a low of $58.42 on Friday, its lowest since October 2017. U.S. West Texas Intermediate was trading 0.4 percent up at $51.76 a barrel, after falling as low as $50.14 on Monday, its lowest since the October 2017.

Gold prices rose as the investors cautiously awaited clues on the pace of future U.S. interest rate hikes, while the U.S.-China trade dispute intensified ahead of a G20 summit. Spot gold nudged up 0.2 percent to $1,224.52 per ounce at 1027 GMT, having hit a high of $1229.93 on Wednesday, its highest since Nov. 7. U.S. gold futures were down 0.2 percent at $1,220.2 an ounce.

Treasuries Recap

The U.S. Treasuries gained during late afternoon session amid a muted trading session that witnessed data of little economic significance.  The yield on the benchmark 10-year Treasuries fell nearly 1-1/2 basis points to 3.057 percent, the super-long 30-year bond yields traded 1 basis point lower at 3.310 percent and the yield on the short-term 2-year traded tad lower at 2.831 percent.

The United Kingdom’s gilts remained range-bound during the afternoon session ahead of the Bank of England’s (BoE) Financial Stability Report, scheduled to be released on November 28. The yield on the benchmark 10-year gilts, slumped 2 basis points to 1.391 percent, the super-long 30-year bond yields remained tad lower at 1.969 percent and the yield on the short-term 2-year too traded 1/2 basis point lower at 0.767 percent.

The German bunds jumped during European session ahead of the European Central Bank’s (ECB) President Mario Draghi’s speech, scheduled to be held on November 29 by 14:00GMT, followed by the country’s unemployment change for the month of November, scheduled to be released on the same day by 08:55GMT for further direction in the debt market. The German 10-year bond yields, which move inversely to its price, plunged nearly 2-1/2 basis points to 0.340 percent, the yield on 30-year note slumped 2 basis points to 0.999 percent and the yield on short-term 2-year traded tad lower at -0.640 percent.

The Japanese government bonds traded flat during Asian session as well after the Bank of Japan’s (BoJ) core consumer price inflation (CPI) index remained tad higher on a y/y basis, ahead of the country’s retail sales and industrial production data for the month of October, scheduled to be released on November 28 and 29 respectively by 23:50GMT. The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained flat at 0.090 percent, the yield on the long-term 30-year note hovered around 0.815 percent while the yield on short-term 2-year fell to -0.139 percent, from yesterday’s 0.143 percent.

The Australian government bonds traded tad lower during Asian session as investors’ risk appetite showed signs of improvement, tracking a similar movement in the United States’ Treasuries. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, hovered around 2.632 percent, the yield on the long-term 30-year bond traded flat at 3.156 percent and the yield on short-term 2-year traded nearly steady at 2.030 percent.

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