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Europe Roundup: Sterling steadies after PM May's Brexit deal defeat, euro eases on EZ's economic outlook concerns, European shares nudge higher - Wednesday, January 16th, 2019

Market Roundup

  • Italy Dec 2018 CPI excl tobacco decrease to 102.1 vs previous 102.2
     
  • Italy Dec 2018 CPI excl tobacco m/m decrease to 1 % vs previous 1.4 %
     
  • Italy Dec 2018 consumer prices final yy stays flat at 1.1 % (forecast 1.1 %) vs previous 1.1 %
     
  • Italy Dec 2018 consumer prices final mm stays flat at -0.1 % (forecast -0.1 %) vs previous -0.1 %
     
  • Italy Dec 2018 CPI (EU norm) final yy stays flat at 1.2 % (forecast 1.2 %) vs previous 1.2 %
     
  • Italy Dec 2018 CPI (EU norm) final mm stays flat at -0.1 % (forecast -0.1 %) vs previous -0.1 %
     
  • United Kingdom Dec 2018 CPI nsa increase to 107.1 vs previous 106.97
     
  • United Kingdom Dec 2018 PPI core output mm nsa increase to 0.2 % (forecast 0.1 %) vs previous 0.1 %
     
  • United Kingdom Dec 2018 core CPI mm stays flat at 0.3 % (forecast 0.3 %) vs previous 0.3 %
     
  • United Kingdom Dec 2018 PPI core output yy nsa increase to 2.5 % (forecast 2.4 %) vs previous 2.4 %
     
  • United Kingdom Dec 2018 PPI output prices mm nsa decrease to -0.3 % vs previous 0.1 % (revised from 0.2 %)
     
  • United Kingdom Dec 2018 PPI output prices yy nsa decrease to 2.5 % (forecast 2.9 %) vs previous 3 % (revised from 3.1 %)
     
  • United Kingdom Dec 2018 PPI input prices yy nsa decrease to 3.7 % (forecast 3.5 %) vs previous 5.3 % (revised from 5.6 %)
     
  • United Kingdom Dec 2018 PPI input prices mm nsa increase to -1 % (forecast -1.6 %) vs previous -2.6 % (revised from -2.3 %)
     
  • United Kingdom Dec 2018 RPI yy decrease to 2.7 % (forecast 2.9 %) vs previous 3.2 %
     
  • United Kingdom Dec 2018 RPI index increase to 285.6 vs previous 284.6
     
  • United Kingdom Dec 2018 RPI-X (retail prices) mm increase to 0.4 %
     
  • United Kingdom Dec 2018 CPI mm stays flat at 0.2 % (forecast 0.2 %) vs previous 0.2 %
     
  • United Kingdom Dec 2018 CPI yy decrease to 2.1 % (forecast 2.1 %) vs previous 2.3 %
     
  • United Kingdom Dec 2018 RPIX yy decrease to 2.7 % vs previous 3.1 %
     
  • United Kingdom Dec 2018 RPI mm increase to 0.4 % (forecast 0.5 %)
     
  • United Kingdom Dec 2018 core CPI yy increase to 1.9 % (forecast 1.8 %) vs previous 1.8 %
     

Economic Data Ahead

  • (0830 ET/1330 GMT) The U.S. Labor Department publishes the import and export prices index for the month of December. The import prices are likely to have declined 1.3 percent after slumping 1.6 percent in November, while exports are expected to have edged down 0.6 percent after falling 0.9 percent in the prior month.
     
  • (1000 ET/1500 GMT) The National Association of Home Builders (NAHB) is expected to report that the U.S. Housing Market Index rose to 56 in December, after posting a similar increase in November.
     
  • (1100 ET/1600 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending January 11.
     

Key Events Ahead

  • (1230 ET/1730 GMT) ECB policymaker and French central bank chief Francois Villeroy de Galhau gives a New Year address to the French financial sector in Paris in Paris, France.
     
  • (1400 ET/1900 GMT) Federal Reserve issues the Beige Book of economic condition in Washington D.C.
     
  • (1830 ET/2330 GMT) Federal Reserve Bank of Minneapolis President Neel Kashkari speaks on "Ten Years After the Global Financial Crisis, the System is Safer" at the Intelligence Squared Debate in New York.
     

FX Beat

DXY: The dollar rallied, extending prior session gains, as worries about the euro zone’s economic outlook weighed on the euro, while sterling consolidated ahead of a no-confidence vote on Prime Minister Theresa May's government. The greenback against a basket of currencies trades flat at 96.05, having touched a high of 96.26 on Tuesday, its highest since Jan. 4. FxWirePro's Hourly Dollar Strength Index stood at 114.21 (Highly Bullish) by 1000 GMT.

EUR/USD: The euro slumped after European Central Bank board member, Yves Mersch, stated that the euro zone's growth slowdown remains consistent with recent projections so it does not require a policy response from the ECB. The European currency traded 0.1 percent down at 1.1405, having touched a low of 1.1382 on Tuesday, its lowest since Jan. 4. FxWirePro's Hourly Euro Strength Index stood at -124.84 (Highly Bearish) by 1000 GMT. Immediate resistance is located at 1.1442 (December 10 High), a break above targets 1.1500 (November 7 High). On the downside, support is seen at 1.1382 (January 15 Low), a break below could drag it till 1.1342 (Dec. 26 Low).

USD/JPY: The dollar surged to a 1-week peak, underpinned by signs that China will take more steps to bolster its slowing economy. The major was trading 0.1 percent up at 108.77, having hit a low of 107.77 last week, its lowest since Jan 4. FxWirePro's Hourly Yen Strength Index stood at -28.27 (Neutral) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. import and export price index, housing market index and FOMC member Kashkari's speech. Immediate resistance is located at 109.08 (January 8 High), a break above targets 109.46 (April 26 High). On the downside, support is seen at 107.65 (April 23 Low), a break below could take it lower 107.35 (April 20 Low).

GBP/USD: Sterling edged higher after falling to an over 1-week low in the previous session, on expectations the scale of Prime Minister Theresa May's Brexit deal defeat might force lawmakers to pursue other options. The major traded 0.1 percent up at 1.2868, having hit a high of 1.2930 on Monday; it’s highest since November 15. FxWirePro's Hourly Sterling Strength Index stood at 159.39 (Highly Bullish) 1000 GMT. Immediate resistance is located at 1.2946 (November 12 High), a break above could take it near 1.3030 (November 15 High). On the downside, support is seen at 1.2795 (November 26 Low), a break below targets 1.2723 (November 15 Low). Against the euro, the pound was trading 0.1 percent up at 88.62 pence, having hit a high of 88.43, it’s highest since November 28.

USD/CHF: The Swiss franc eased, extending previous session losses, as the broader equity markets regained some calm after experiencing a heavy round of risk aversion. The major trades 0.1 percent up at 0.9885, having touched a high of 0.9893 on Tuesday; it’s highest since January 4. FxWirePro's Hourly Swiss Franc Strength Index stood at 33.32 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 0.9906 (January 3 High) and any break above will take the pair to next level till 0.9937 (December 18 High). The near-term support is around 0.9846 (January 3 Low), and any close below that level will drag it till 0.9787 (January 7 Low).

Equities Recap

European shares rose, supported by gains in the banking stocks, while sterling steadied ahead of a no-confidence vote on Prime Minister Theresa May's government.

The pan-European STOXX 600 index advanced 0.3 percent at 349.77 points, while the FTSEurofirst 300 index rallied 0.2 percent to 1,376.00 points.

Britain's FTSE 100 trades 0.4 percent down at 6,869.27 points, while mid-cap FTSE 250 rose 0.2 to 18,456.60 points.

Germany's DAX rose 0.2 percent at 10,913.77 points; France's CAC 40 trades 0.4 percent higher at 4,803.63 points.

Commodities Recap

Crude oil prices steadied after rising about 3 percent in the previous session on expectations that OPEC-led production cuts will tighten supply and that possible Chinese stimulus might support the global economy. International benchmark Brent crude was trading 0.1 percent up at $60.58 per barrel by 1034 GMT, having hit a high of $62.46 on Friday, its highest since December 7. U.S. West Texas Intermediate was trading 0.2 percent lower at $51.89 a barrel, after rising as high as $53.29 on Friday, its highest since the December 7.

Gold prices rose, supported by uncertainty around Brexit after lawmakers voted down British Prime Minister Theresa May's deal to leave the European Union. Spot gold was up 0.1 percent at $1,289.88 per ounce by 1036 GMT, having touched a high of $1,298.42 earlier in the month, its highest level since June 15. U.S. gold futures were up 0.2 percent at $1,290.90 per ounce.

Treasuries Recap

The U.S. Treasuries suffered during the late afternoon session, ahead of the country’s retail sales data for the month of December, scheduled to be released today by 13:30GMT. The yield on the benchmark 10-year Treasuries jumped 2-1/2 basis points to 2.734 percent, the super-long 30-year bond yields surged 3 basis points to 3.098 percent and the yield on the short-term 2-year traded 1-1/2 basis points higher at 2.543 percent.

The United Kingdom’s gilts suffered during Wednesday’s afternoon session, as uncertainties hover around Brexit, following the massive defeat that Prime Minister Theresa May faced yesterday at the British Parliament. The yield on the benchmark 10-year gilts, jumped 6 basis points to 1.318 percent, the super-long 30-year bond yields surged 5 basis points to 1.830 percent and the yield on the short-term 2-year traded 4-1/2 basis points higher at 0.841 percent.

The German bunds remained tad lower during European session after the country’s consumer price inflation (CPI) remained unchanged during the month of January, meeting market expectations as well. The German 10-year bond yields, which move inversely to its price, rose nearly 1 basis point to 0.212 percent, the yield on 30-year note remained tad higher at 0.828 percent and the yield on short-term 2-year traded flat at -0.615 percent.

The Japanese government bonds remained mixed amid a quiet session ahead of the country’s national consumer price inflation (CPI) data and Bank of Japan (BoJ) Governor Kuroda’s speech, both scheduled to for later in the week for further direction in the debt market. The yield on the benchmark 10-year JGB note, which moves inversely to its price, fell 1 basis point to -0.006 percent, the yield on the long-term 30-year note slipped 1/2 basis point to 0.696 percent while the yield on short-term 2-year nearly 16 basis points to -0.157 percent.

The Australian government bonds slightly gained across the curve during Asian trading session after the United Kingdom’s lawmakers pulled out of a Brexit deal plan in a voting concluded late yesterday. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped 1 basis point to  2.276 percent, the yield on the long-term 30-year bond slipped 1/2 basis point to 2.827 percent and the yield on short-term 2-year traded tad lower at 1.871 percent.

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July 2 15:00 UTC Released

DKCurrency Reserves

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449.6 Stale

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451.7 Stale

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50 %

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48.6 %

January 31 00:00 UTC 815554815554m

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January 22 19:00 UTC 827374827374m

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