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Europe Roundup: Sterling steadies as UK economy grows at slowest annual rate, euro holds near 4-week trough amid political turmoil, European shares tumble - Monday, November 11th, 2019

Market Roundup

  • UK economy grows at slowest annual rate since 2010 in Q3
     
  • U.S. markets remain closed on account of Veteran’s Day holiday.
     
  • Gold rises as economic slowdown linger
     
  • Oil decline more than 1% on concern over U.S.-China trade war
     

Economic Data Ahead

  • No major economic data releases

Key Events Ahead

  • (0815 ET/1315 GMT) Fed Rosengren's speech
     
  • (1030 ET/1530 GMT) ECB Mersch gives a speech

FX Beat

DXY: The dollar index eased from a 3-week peak as traders kept a wary eye on further news on the U.S.-China trade war. The greenback against a basket of currencies traded 0.2 percent down at 98.23, having touched a high of 98.40 on Friday, its highest since October 16.

EUR/USD: The euro rebounded from a near 4-week low hit earlier in the session, as Spanish election at the weekend delivered a deeply riven parliament and set the stage for difficult talks to form a new ruling coalition. The European currency traded 0.1 percent up at 1.1032, having touched a low of 1.1016 on Friday, its lowest since October 15. Immediate resistance is located at 1.1067 (5-DMA), a break above targets 1.1123. On the downside, support is seen at 1.1012, a break below could drag it below 1.0985.

USD/JPY: The dollar plunged against the safe-haven Japanese yen amid fading optimism that the United States and China would roll back tariffs that have hurt global growth. The major was trading 0.2 percent down at 108.91, having hit a high of 109.48 on Thursday, its highest since May 31. Investors’ will continue to track the broad-based market sentiment, ahead of the Fed Rosengren's speech. Immediate resistance is located at 109.62 (May 31 High), a break above targets 109.92 (May 30 High). On the downside, support is seen at 108.74 (10-DMA), a break below could take it near at 108.49.

GBP/USD: Sterling rose from a 3-week low hit in the previous session after data showed Britain’s economy grew at the slowest annual rate in nearly a decade in the three months to the end of September, as a global slowdown and Brexit worries hit business investment and manufacturing. The slowdown reflected a smaller-than-expected rebound in quarterly GDP growth after a contraction in the second quarter. The major traded 0.4 percent up at 1.2822, having hit a low of 1.2768 on Friday, it’s lowest since October 17. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2840 (5-DMA), a break above could take it near 1.2897 (November 6 High). On the downside, support is seen at 1.2748, a break below targets 1.2700. Against the euro, the pound was trading 0.2 percent up at 86.01 pence, having hit a low of 86.57 on Thursday, it’s lowest since October 25.

USD/CHF: The Swiss franc surged, retreating from a 3-week trough amid lingering concerns over the U.S.-China trade deal and the prospect of a slowing global economy. The major trades at 0.2 percent down at 0.9947, having touched a high of 0.9978 the day before, it’s highest since October 16. On the higher side, near-term resistance is around 0.9983 and any break above will take the pair to the next level till 1.0007. The near-term support is around 0.9930 (5-DMA), and any close below that level will drag it till 0.9900.

Equities Recap

European shares slumped, weighed down by as an escalation in Hong Kong protests, an inconclusive Spanish election and Moody’s warning on Britain’s sovereign debt.

The pan-European STOXX 600 index tumbled 0.5 percent at 403.58 points, while the FTSEurofirst 300 plunged 0.5 percent to 1,580.34 points.

Britain's FTSE 100 trades 1.3 percent down at 7,265.02 points, while mid-cap FTSE 250 declined 0.6 to 20,230.09 points.

Germany's DAX eased 0.4 percent at 13,170.87 points; France's CAC 40 trades 0.1 percent lower at 5,883.46 points.

Commodities Recap

Crude oil prices declined by more than 1 percent amid concerns over the prospects of a trade deal between the United States and China, while worries about oversupply also weighed on market sentiment.  International benchmark Brent crude was trading 1.5 percent down at $61.61 per barrel by 1048 GMT, having hit a low of $60.65 on Friday, its lowest since November 1. U.S. West Texas Intermediate was trading 1.9 percent down at $56.28 a barrel, after falling as low as $55.74 on Friday, its lowest since November 1.

Gold prices surged, retreating from a 3-month low hit in the previous session, amid lingering concerns over the U.S.-China trade deal and the prospect of a slowing global economy. Spot gold was trading 0.5 percent up at $1,457.49 per ounce by 1053 GMT, having touched a low of $1,456.08 on Friday, its lowest August 5. U.S. gold futures were flat at $1,462.90 per ounce.

Treasuries Recap

The United Kingdom’s gilts gained during European trading hours after the country’s gross domestic product (GDP) for the third quarter of this year and the manufacturing production for the month of September disappointed market participants, while eyes still remain on the labour market report for the similar period, scheduled to be released on November 12 by 09:30GMT for further direction in the labour market. The yield on the benchmark 10-year gilts, suffered nearly 2 basis points to 0.774 percent, the 30-year yield slipped nearly 1-1/2 basis points to 1.294 percent and the yield on the short-term 2-year traded tad 1 basis point down at 0.541 percent

The German bunds climbed during European trading session ahead of the country’s ZEW economic sentiment data for the month of November, scheduled to be released on November 12 by 10:00GMT and the gross domestic product (GDP) for the third quarter of this year, due on November 14 by 07:00GMT, for further insight into the debt market. The German 10-year bond yield, which move inversely to its price, edged tad down to -0.271 percent, the yield on 30-year note slid 1 basis point to 0.222 percent and the yield on short-term 2-year traded 1-1/2 basis points down at -0.631 percent.

The Australian government bonds gained during Asian session of the first trading day of the week ahead of the country’s employment report for the month of October, scheduled to be released later this week amid ongoing U.S.-China trade uncertainties after President Donald Trump casted doubts over potential rollback of existing tariffs as part of the Phase 1 trade deal. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped 1/2 basis point to 1.291 percent, the yield on the long-term 30-year bond hovered around 1.893 percent and the yield on short-term 2-year suffered 2 basis points to 0.874 percent.

By Lactus Fernandes
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