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Europe Roundup: Sterling steadies ahead of UK budget statement, dollar index off 1-week high as investors cautiously await FOMC meeting minutes, European shares advance - Wednesday, November 22nd, 2017

Market Roundup

  • EUR/USD 0.11%, USD/JPY -0.33%, GBP/USD 0.01%, EUR/GBP 0.09%
     
  • DXY -0.12%, DAX -0.39%, FTSE 0.29%, Brent 1.02%, Gold 0.29%
     
  • Boxed in by slow growth, UK's Hammond readies budget
     
  • UK service sector's profitability drops to lowest since 2013
     
  • Regulation should not hinder cross-border bank deals -ECB's Villeroy
     
  • Germany's bond yield curve flattest in more than two months
     
  • Oil jumps, U.S. light crude at 2-1/2-year high on Canada pipeline woe
  • Gold rises as dollar dips ahead of Fed minutes
     

Economic Data Ahead
 

  • (0830 ET/1330 GMT) The U.S. durable goods orders are expected to have increased 0.3 percent in October after rising 2.0 percent in September, while non-defense capital goods orders excluding aircraft are likely to have risen 0.5 percent after surging 1.7 percent the prior month.
     
  • (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 9,000 to a seasonally adjusted 240,000 for the week ended Nov. 18, while continuing claims for the week ended Nov. 10 is expected to rise to 1.882 million from the previous 1.860 million.
     
  • (1000 ET/1500 GMT) The University of Michigan is likely to report that U.S. consumer sentiment index rose to 98.0 in November, after posting a reading of 97.8 in October.
     
  • (1000 ET/1500 GMT) The European Commission releases Eurozone's preliminary Consumer Confidence reading for the month of November. The index posted a final reading of -1.0 in the prior month.
     
  • (1100 ET/1600 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending November 17.
     
  • (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending November 17.
     
  • (1615 ET/2145 GMT) The Statistics New Zealand will release its Retail Sales figures for the third quarter. The indicator stood at 2.0 percent, while retail sales ex-autos were at 2.1 percent in the previous quarter.

Key Events Ahead

  • (0730 ET/1230 GMT) UK finance minister Philip Hammond will deliver a budget statement.
     
  • (0845 ET/1345 GMT) FedTrade Operation 30-year Fannie Mae / Freddie Mac (max $1.645 bn)
     
  • (1400 ET/1900 GMT) The Federal Open Market Committee issues minutes from its latest policy meeting,

FX Beat

DXY: The dollar index tumbled following a drop in the U.S. Treasury yields, while the investors remained cautious ahead of the release of minutes from the U.S. Federal Reserve's last meeting, which could offer hints on the outlook for the central bank's monetary policy. The greenback against a basket of currencies traded 0.2 percent down at 93.84, having touched a high of 94.17 the day before, its highest since Nov. 14. FxWirePro's Hourly Dollar Strength Index stood at -2.32 (Neutral) by 1000 GMT.

EUR/USD: The euro extended gains, boosted by expectations of stronger Eurozone economic growth outlook and persistent weakness seen behind the dollar across the board amid flatting U.S. Treasury yield curve. The European currency traded 0.1 percent up at 1.1752, having touched a low of 1.1713 on Tuesday; its lowest since Nov. 14. FxWirePro's Hourly Euro Strength Index stood at -130.20 (Highly Bearish) by 1000 GMT. The near-term resistance is around 1.1760 and any break above will take the pair to next level till 1.1800/1.1825. On the lower side, major support is around 1.17000 and any break below will drag the pair to next level till 1.1660/1.1600/1.1553 (Nov 7th, 2017 low).

USD/JPY: The dollar slumped against the Japanese yen as the U.S. Treasury yield curve flattened, in the wake of Federal Reserve Chair Janet Yellen’s cautious remarks on the inflation outlook. The major was trading 0.3 percent down at 112.06, having hit a low of 111.88 on Tuesday, its lowest since Oct. 16. FxWirePro's Hourly Yen Strength Index stood at 89.15 (Highly Bullish) by 1000 GMT. On the lower side, any close below 111. 72 (100- day MA) confirms minor weakness, a decline till 111.13/110 likely. Any convincing close above 113.36 (61.8% fib) confirms minor bullishness, a jump till 114/114.73 likely.

GBP/USD: Sterling consolidated within a narrow range, as investors refrained from taking any large new positions ahead of a budget statement from the country's finance minister Philip Hammond. The major traded 0.1 percent up at 1.3245, having hit a high of 1.3279 on Monday, it’s highest since Nov. 2. FxWirePro's Hourly Sterling Strength Index stood at 78.74 (Slightly Bullish) by 1000 GMT. Any break above 1.3380 will take the pair to next level till 1.3400/1.3500. On the lower side, near-term support is around 1.31750 and any break below will drag it next level till 1.3130/1.3100/1.3060/1.30270. Against the euro, the pound was trading 0.1 percent down at 88.73 pence, having hit a high of 88.42 pence the prior day, it’s highest since Nov. 10.

USD/CHF: The Swiss franc rose, extending gains from the previous session, as the greenback eased after the Fed Chair Janet Yellen's comments on stubbornly low inflationary pressure signaled that the Fed might refrain from raising rates aggressively in 2018. The major trades 0.2 percent down at 0.9897, having touched a low of 0.9846 last week, it’s lowest since Oct. 24. FxWirePro's Hourly Swiss Franc Strength Index stood at 97.53 (Slightly Bullish) by 1000 GMT. The near-term support is around 0.9875 (34- day EMA) and any convincing break below will drag the pair to next level till 0.9845 (233- day MA)/0.9805 (38.2% retracement of 0.9420 and 1.00390)/0.9770. The major resistance is around 0.9950 (20- day MA) and any break above will take it to next level till 0.9980/1.000/1.0040.

AUD/USD: The Australian dollar declined, hovering towards 5-month lows hit in the previous session, as the Australian Senator Skye Kakosche-Moore resigned after he revealed that he held a dual citizenship, in the wake of last month’s Australia’s High Court ruling on citizenship. The Aussie trades 0.2 percent down at 0.7561, having hit a low of 0.7532 the day before; it’s lowest since Jun. 14. FxWirePro's Hourly Aussie Strength Index stood at -116.23 (Highly Bearish) 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 0.7600 (7- day MA) and any break above targets 0.7650/0.7680/0.7730/0.7780.

Equities Recap

European shares rose, boosted by a bullish growth and company earnings outlook, while the greenback slipped from 1-week high ahead of the release of minutes from the U.S. Federal Reserve's last meeting.

The pan-European STOXX 600 index rallied 0.1 percent to 388.28 points, while the FTSEurofirst 300 index gained 0.1 percent to 1,526.99 points.

Britain's FTSE 100 trades 0.3 percent higher at 7,431.06 points, while mid-cap FTSE 250 rose 0.3 percent to 19,997.38 points.

Germany's DAX fell 0.3 percent at 13,132.60 points; France's CAC 40 trades 0.05 percent down at 5,364.71 points.

Commodities Recap

Crude oil prices rallied by more than 1 percent to over week highs on the back of ongoing cuts of piped Canadian crude to the United States and expectations of a prolonged OPEC-led production cut. International benchmark Brent crude was trading 0.6 percent up at $63.08 per barrel by 1016 GMT, having hit a high of $63.36 earlier, its highest since Nov. 13. U.S. West Texas Intermediate was trading 1.3 percent up at $57.82 a barrel, after rising as high as $57.95, its highest since June 2015.

Gold prices rose amid a softer dollar, with investors remaining cautious ahead of the release of minutes from the U.S. Federal Reserve's last meeting. Spot gold was 0.3 percent up at $1,282.91 per ounce by 1026 GMT, having touched a low of $1,274.36 on Monday, its lowest since Nov. 14. U.S. gold futures for December delivery gained 0.1 percent at $1,282.80.

Treasuries Recap

The U.S. Treasuries remained range-bound as investors remained sidelined in any major trading activity ahead of the FOMC November meeting minutes, scheduled to be released today by 19:00GMT ahead of a long weekend on account of Thanksgiving Day celebration. The yield on the benchmark 10-year Treasuries rose 1 basis point to 2.37 percent, the super-long 30-year bond yields climbed 1-1/2 basis points to 2.77 percent and the yield on short-term 2-year note traded nearly flat at 1.77 percent.

The German bunds slumped as investors wait to watch the country’s third-quarter GDP, scheduled to be released on November 23 by 07:00GMT. The German 10-year bond yields, which move inversely to its price, slumped 2-1/2 basis points to 0.37 percent, the yield on 30-year note traded tad lower at 1.20 percent and the yield on short-term 2-year plunged nearly 3 basis points to -0.69 percent.

The New Zealand bonds closed higher as a downward trend in prices continued in Global Dairy Trade (GDT) auction. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 3 basis points to 2.820 percent, the yield on 20-year note also dipped 2 basis points to 3.400 percent and the yield on short-term 2-year ended 1 basis point lower at 1.990 percent.

The Japanese bonds gained following the Bank of Japan (BoJ) daily market operation ahead of the Thanksgiving holiday. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 0.023 percent, the yield on long-term 40-year also declined nearly 1 basis point to 0.975 percent and the yield on short-term 2-year slid ½ basis point at -0.201 percent.

The Australian bonds gained after Australian senator Skye Kakoschke-Moore resigned from the Parliament after she was confirmed having dual citizen. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 2 basis points to 2.535 percent, the yield on the long-term 30-year note dipped 4 basis points to 3.294 percent and the yield on short-term 2-year fell 1/2 basis point to 1.786 percent.

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