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Europe Roundup: Sterling steadies above 1.3200, dollar rebounds from 11-day lows against yen as U.S. Treasury yields resume rise, European shares near 5-month peak - Tuesday, October 31st, 2017

Market Roundup

  • EUR/USD -0.15%, USD/JPY 0.14%, GBP/USD 0.05%, EUR/GBP -0.22%
     
  • DXY 0.07%, DAX 0%, FTSE 0.12%, Brent -0.11%, Gold -0.14%
     
  • Bank of England sees up to 75,000 finance job losses after Brexit - BBC
     
  • EZ Q3 GDP Flash Prelim YY 2.5% vs 2.3%, forecast 2.4%
     
  • EZ Oct Inflation, Flash YY 1.4% vs 1.5%, forecast 1.5%
     
  • UK Oct GfK Consumer Confidence -10 vs -9, forecast -10
     
  • EZ Oct Infl Ex food & Enr Flash 1.1% vs 1.3%, forecast 1.2%
     
  • EZ Sept Unemployment Rate 8.9% vs 9.1%, forecast 9.0%, revised 9.0%
     
  • BoJ leaves policy as is, ultra-easy, Kataoka dissents on YCC
     
  • Spain awaits next move by ousted Catalan leader from Belgium
     
  • French economy grows at fastest pace since 2011

Economic Data Ahead

  • (0830 ET/1230 GMT) The U.S. Labor Department will release its employment cost index for the third quarter. The index is expected to rise 0.7 percent from 0.5 percent in the previous quarter. 
     
  • (0830 ET/1230 GMT) The Statistics Canada releases its Raw Material Price Index for the month of September. The index posted a rise of 1.0 percent in August.
     
  • (0830 ET/1230 GMT) The Statistics Canada will report its industrial producer prices for the month of September. The indicator rose 0.3 percent in the prior month.
     
  • (0830 ET/1230 GMT) The Statistics Canada is expected to report that gross domestic product increased 0.1 percent in August, after staying flat in the previous month.
     
  • (0900 ET/1300 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 6.0 percent in August, after rising 5.8 percent in the previous month.
     
  • (0945 ET/1345 GMT) Chicago Purchasing Managers' Index is likely to show that business conditions eased to 61.0 in October from 65.2 last month.
     
  • (1000 ET/1400 GMT) The U.S. consumer confidence index is expected to have increased to a reading of 121 in October from 119.8 in the month of September.
     
  • (1630 ET/2030 GMT) API reports its weekly crude oil stock.
     
  • (1745 ET/2145 GMT) The Statistics New Zealand reports its unemployment rate for the third quarter. The indicator stood at 4.8 percent in the second quarter.
     
  • (1830 ET/2230 GMT) Australian Industry Group (AiG) releases its performance of manufacturing index for the month of October. The index stood at 54.2 in September.
     

Key Events Ahead

  • (1145 ET/1545 GMT) FedTrade Operation 30-year Fannie Mae / Freddie Mac (max $1.295 bn)
     
  • (1300 ET/1700 GMT) The Federal Reserve's Federal Open Market Committee commences its two-day meeting on interest rate policy in Washington.
     
  • (1530 ET/1930 GMT) Bank of Canada Governor Stephen Poloz accompanied by Senior Deputy Governor Carolyn Wilkins will take questions from lawmakers before the House of Commons Standing Committee on Finance in Ottawa.

FX Beat

DXY: The dollar index steadied following a rebound in the U.S. Treasury bond yields, while investors remained cautious ahead of a two-day U.S. Federal Reserve policy meeting beginning today. The greenback against a basket of currencies traded 0.1 percent up at 94.64, having touched a high of 95.15 on Friday, its highest since July. 20. FxWirePro's Hourly Dollar Strength Index stood at 82.01 (Slightly Bullish) by 1000 GMT.

EUR/USD: The euro declined after data showed Eurozone’s preliminary consumer price index rose at an annualized rate of 1.4 percent in October, below estimate and previous reading of 1.5 percent. However, the downside was limited as GDP figures showed the economy expanded at an annualized 2.5 percent during the July-September period, surpassing prior survey. The European currency traded 0.2 percent down at 1.1631, having touched a low of 1.1574 on Friday, its lowest since Jul. 20. FxWirePro's Hourly Euro Strength Index stood at -117.85 (Highly Bearish) by 1000 GMT. On the lower side, the near term support is around 1.15450 (161.8% retracement of 1.16691 and 1.1880) and any convincing break below will drag the pair down till 1.1500/1.1400. On the higher side, near-term resistance is around 1.1660 (Support turned into resistance) and any break above will take it to next level till 1.1686 (100- H MA)/1.1720 /1.1740 (233- H MA).

USD/JPY: The dollar rebounded from an 11-day low hit earlier in the session, as a modest pickup in the U.S. Treasury bond yields, helped to offset early weakness led by concerns over a probe into possible Russian meddling in the 2016 U.S. election. The major was trading 0.2 percent up at 113.33, having hit a low of 112.95, its lowest since Oct. 20. FxWirePro's Hourly Yen Strength Index stood at 83.71 (Slightly 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% fibo) confirms minor bullishness, a jump till 116 likely.

GBP/USD: Sterling rose, extending gains above the 1.3200 handle as investors awaited a rate hike from the Bank of England and the central bank's statement for the future direction of interest rates this week. The major traded 0.1 percent up at 1.3221, having hit a low of 1.3070 on Friday, its lowest since Oct. 6. FxWirePro's Hourly Sterling Strength Index stood at 92.94 (Slightly Bullish) by 1000 GMT. The pair has taken support near 38.2% retracement at 1.3075 and any violation below will take it till 1.30270 likely. On the higher side, near-term resistance is around 1.3230 and any break above will take it to next level till 1.3280 (Oct 26th, 2017 high)/1.3300/1.3380. Against the euro, the pound was trading 0.3 percent up at 87.97 pence, having hit a high of 87.93 pence the day before, its highest since Sept. 29.

USD/CHF: The Swiss franc eased towards 5-month lows as the greenback rose on talk that the next chair of the U.S. Federal Reserve could steer policy in a more hawkish direction. The major trades 0.5 percent up at 0.9989, having touched a high of 1.0037 on Friday, it’s highest since May. 12. FxWirePro's Hourly Swiss Franc Strength Index stood at -63.36 (Neutral) by 1000 GMT. The near-term support stands at 0.9930 (61.8 retracement of 0.9865 and 1.00378) and any break below will drag the pair to next level till 0.9900/0.9870 (233- H MA). The major resistance is around 1.000 and any break above will take it to next level till 1.0040/1.0100.

AUD/USD: The Australian dollar slumped after rising for two consecutive sessions, following a slight miss on the Chinese manufacturing PMI print and weak sentiment around the commodity bloc. The Aussie trades 0.3 percent down at 0.7663, having hit a low of 0.7624 on Friday, it’s lowest since Jul. 11. FxWirePro's Hourly Aussie Strength Index stood at -46.51 (Neutral) by 1000 GMT. On the lower side, the pair should close below 0.7648 (233 –day MA) and any close below targets 0.7600/0.7550. The near-term resistance is around 0.7720 (23.6% fibo) and any break above targets 0.7758 (7- day MA)/0.7801 (21 – day EMA)/0.7860/0.7900/0.7950/0.8000.

Equities Recap

European shares held gains at five-month highs, while dollar rebounded from an 11-day low against the yen following a rise in the U.S. Treasury bond yields.

The pan-European STOXX 600 index rallied 0.1 percent to 395.09 points, while the FTSEurofirst 300 index advanced 0.3 percent to 1,553.22 points.

Britain's FTSE 100 trades 0.3 percent higher at 7,509.74 points, while mid-cap FTSE 250 rose 0.1 percent to 20,222.26 points. France's CAC 40 trades 0.1 percent up at 5,501.28 points.

Commodities Recap

Crude oil prices declined as the prospect of increasing U.S. exports dampened bullish sentiment that had boosted prices to multi-month highs. International benchmark Brent crude was trading 0.5 percent down at $60.51 per barrel by 1013 GMT, having hit a high of $60.98 the day before, its highest since Jul. 3. U.S. West Texas Intermediate was trading flat at $54.13 a barrel, after rising as high as $54.43 the prior day, its highest since Mar. 1.

Gold prices eased, reversing some of its previous session gains, after the Bank of Japan kept its monetary policy steady, with investors shifting their attention to other central bank meetings this week. Spot gold fell 0.1 percent to $1,275.19 per ounce at 1016 GMT, having touched its lowest since Oct. 6 at $1266.67 on Friday. U.S. gold futures for December delivery dipped 0.1 percent to $1,277.10.

Treasuries Recap

The U.S. Treasuries flat in muted trading session as investors remained sidelined in any major trading activity ahead of Wednesday’s FOMC monetary policy decision. The yield on the benchmark 10-year Treasury rose nearly 1 basis point to 2.37 percent, the super-long 30-year bond yields also climbed closely 1 basis point to 2.88 percent and the yield on short-term 2-year note traded flat at 1.58 percent.

The UK gilts gained as investors poured into safe-haven assets ahead of the country’s manufacturing PMI for the month of October, scheduled to be released on November 1 by 09:30GMT, besides, the construction PMI for the month of October, due on November by 09:30GMT, which will add further direction to the debt market. The yield on the benchmark 10-year gilts, fell nearly 1-1/2 basis points to 1.32 percent, the super-long 30-year bond yields also slipped close to 1-1/2 basis points to 1.89 percent and the yield on the short-term 2-year traded 1 basis point lower at 0.44 percent.

The New Zealand bond sharply jumped on the continuous rise in investors’ worries over the political health of the country after the recent formation of the coalition government, backed by NZ First Party. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 6-1/2 basis points to 2.94 percent, the yield on the 20-year note plunged 7 basis points to 3.47 percent and the yield on short-term 2-year fell 1 basis point to 2.02 percent.

The Japanese bonds slightly gained after the Bank of Japan cut its inflation growth forecasts for the coming fiscal years, while holding its monetary policy steady, even as its peers in the U.S. and Europe begin to wind down stimulus. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1/2 basis point to 0.065 percent, the yield on long-term 30-year also slipped 1/2 basis point to 0.867 percent and the yield on short-term 2-year traded nearly 1 basis point lower at -0.158 percent.

The Australian bonds rallied as investors poured into safe-haven assets tracking a similar movement in the U.S. counterpart after Fed Governor Jerome Powell seems to be in the run-up for succeeding Janet Yellen in early February next year. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 5-1/2 basis points to 2.686 percent, the yield on the long-term 30-year note also declined 5-1/2 basis points to 3.453 percent and the yield on short-term 2-year slid 3-1/2 basis points to 1.832 percent.

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November 22 00:30 UTC Released

AUConstruction Work Done*

Actual

15.7 %

Forecast

Previous

15.7 %

November 21 13:00 UTC Released

USExp Soybean Inspected

Actual

2131.354 M

Forecast

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2087.458 M

November 22 07:00 UTC 8686m

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Actual

Forecast

Previous

67.3 %

November 22 08:00 UTC 146146m

USRedbook YY

Actual

Forecast

Previous

2.3 %

November 22 08:00 UTC 146146m

ZACore Inflation MM*

Actual

Forecast

0.2 %

Previous

0.4 %

November 22 08:00 UTC 146146m

USMBA Mortgage Applications

Actual

Forecast

Previous

3.1 %

November 22 12:00 UTC 386386m

USMBA Mortgage Applications

Actual

Forecast

Previous

3.1 %

November 22 12:00 UTC 386386m

USJobless Claims 4-Wk Avg

Actual

Forecast

Previous

237.75 k

November 22 13:30 UTC 476476m

USInitial Jobless Claims

Actual

Forecast

240 k

Previous

249 k

November 22 13:30 UTC 476476m

USContinued Jobless Claims

Actual

Forecast

1.882 Mln

Previous

1.860 Mln

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