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Europe Roundup: Sterling steadies as UK government tries to break Brexit impasse, euro rebounds from 2-week low on EZ CPI, European shares plunge - Thursday, January 17th, 2019  

Market Roundup

  • Eurozone Dec 2018 inflation ex-tobacco idx stays flat at 104.1 vs previous 104.1
     
  • Eurozone Nov 2018 construction output mm increase to -0.09 % vs previous -1.63 %
     
  • Eurozone Dec 2018 HICP-x tobacco yy decrease to 1.5 % vs previous 1.9 %
     
  • Eurozone Dec 2018 HICP-x f&e mm increase to 0.4 % (forecast 0.4 %) vs previous -0.2 %
     
  • Eurozone Dec 2018 HICP final yy stays flat at 1.6 % (forecast 1.6 %) vs previous 1.6 %
     
  • Eurozone Dec 2018 HICP-x f,e,a&t final yy stays flat at 1 % (forecast 1 %) vs previous 1 %
     
  • Eurozone Dec 2018 HICP-x f, e, a, t final mm stays flat at 0.5 % (forecast 0.5 %) vs previous 0.5 %
     
  • Eurozone Dec 2018 HICP-x f&e final yy stays flat at 1.1 % (forecast 1.1 %) vs previous 1.1 %
     
  • Italy Nov 2018 trade balance eu decrease to 0.513 eur vs previous 0.744 eur
     
  • Italy Nov 2018 global trade balance increase to 3.843 eur vs previous 3.784 eur
     

Economic Data Ahead

  • (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 4,000 to a seasonally adjusted 220,000 for the week ended Jan. 11, while continuing claims for the week ended Jan. 4 is expected to rise to 1.735 million from 1.722 million.
     
  • (0830 ET/1330 GMT) Philadelphia Federal Reserve releases its manufacturing survey for the month of January. The indicator stood at 9.1 in December.
     
  • (0830 ET/1330 GMT) The ADP releases Canada's employment change figures for the month of December. The economy probably added 39,100 jobs in the previous month.
     
  • (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending January 11.
     

Key Events Ahead

  • (1000 ET/1500 GMT) Bank of England Governor Mark Carney, Deputy Governor Sam Woods, and other senior officials from the bank to speak about competition in the banking sector in London
     
  • (1045 ET/1545 GMT) Federal Reserve Vice Chair for Supervision Randal Quarles participates in "Insurance Regulation and Supervision" discussion before the Insurance Information Institute 2019 Joint Industry Forum, in New York City, United States.
     

FX Beat

DXY: The dollar index rose, hovering towards a 1-1/2 week peak, as worries about the euro zone economy weighed on the euro, while sterling consolidated within narrow ranges as UK government tried to break Brexit impasse. The greenback against a basket of currencies trades flat at 96.07, having touched a high of 96.26 on Tuesday, its highest since Jan. 4. FxWirePro's Hourly Dollar Strength Index stood at 47.81 (Neutral) by 1000 GMT.

EUR/USD: The euro rebounded from a 2-week low after data showed Eurozone inflation steadied at 1.6 percent in December on the year-on-year basis, while core indicators remained stable, confirming its preliminary estimates released earlier in the month. The European currency traded 0.1 percent up at 1.1399, having touched a low of 1.1371 earlier, its lowest since Jan. 4. FxWirePro's Hourly Euro Strength Index stood at -69.72 (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 1.1356 (December 21 Low), a break below could drag it till 1.1325 (Jan. 2 Low).

USD/JPY: The dollar declined, halting a 2-day rally, amid renewed worries about the damage a U.S.-China trade dispute could do to global growth. The major was trading 0.3 percent down at 108.78, having hit a high of 109.19 on Wednesday, its highest since Jan 2. FxWirePro's Hourly Yen Strength Index stood at 37.99 (Neutral) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims and Fed Quarles speech. Immediate resistance is located at 109.20, a break above targets 109.46 (April 26 High). On the downside, support is seen at 108.02 (Jan. 7 Low), a break below could take it lower 107.65 (April 23 Low).

GBP/USD: Sterling consolidated within tight ranges, as investors refrained from taking big positions, amid persisting Brexit deal uncertainty after British Prime Minister Theresa May won a confidence vote in parliament. The major traded 0.1 percent up at 1.2885, having hit a high of 1.2930 on Monday; it’s highest since November 15. FxWirePro's Hourly Sterling Strength Index stood at 142.47 (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 flat at 88.45 pence, having hit a high of 88.36, it’s highest since November 28.

USD/CHF: The Swiss franc plunged to a 3-week low, as the greenback surged amid growing concern over China's economic outlook and possible U.S. tariffs on European cars. The major trades 0.2 percent up at 0.9922, having touched a high of 0.9925 earlier; it’s highest since December 27. FxWirePro's Hourly Swiss Franc Strength Index stood at -64.48 (Bearish) by 1000 GMT. On the higher side, near-term resistance is around 0.9937 (December 18 High) and any break above will take the pair to next level till 0.9963 (December 26 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 plunged, weighed down by concerns over Chinese tech giant Huawei, while sterling steadied near 2-month highs as UK government tried to break Brexit impasse.

The pan-European STOXX 600 index tumbled 0.3 percent at 350.34 points, while the FTSEurofirst 300 index slumped 0.1 percent to 1,377.83 points.

Britain's FTSE 100 trades 0.2 percent down at 6,848.36 points, while mid-cap FTSE 250 eased 0.2 to 18,457.58 points.

Germany's DAX declined 0.3 percent at 10,896.30 points; France's CAC 40 trades 0.3 percent lower at 4,798.12 points.

Commodities Recap

Crude oil prices declined as U.S. crude production neared an unprecedented 12 million barrels per day (bpd). International benchmark Brent crude was trading 0.6 percent down at $60.90 per barrel by 1026 GMT, having hit a high of $62.46 on Friday, its highest since December 7. U.S. West Texas Intermediate was trading 0.9 percent lower at $51.82 a barrel, after rising as high as $53.29 on Friday, its highest since the December 7.

Gold prices rose to a fresh 3-day peak amid growing concerns that the U.S. government shutdown was starting to take a toll on its economy. Spot gold was 0.1 percent up at $1,293.98 per ounce, having touched a high of $1,298.42 earlier in the month, its highest level since June 15. U.S. gold futures dipped 0.1 percent to $1,292.40 per ounce.

Treasuries Recap

The U.S. Treasuries gained during late afternoon session, ahead of the country’s weekly initial jobless claims and 10-year TIPS auction, both scheduled to be released today by 13:30GMT and 18:00GMT respectively. The yield on the benchmark 10-year Treasuries slipped nearly 1-1/2 basis points to 2.716 percent, the super-long 30-year bond yields also fell nearly 1-1/2 basis points to 3.063 percent and the yield on the short-term 2-year too traded 1-1/2 basis points lower at 2.533 percent.

The United Kingdom’s gilts suffered during the afternoon session Prime Minister Theresa May survived a no-confidence vote yesterday at the House of Commons, triggered by opposition Labour Party leader Jeremy Corbyn. The yield on the benchmark 10-year gilts, rose nearly 1 basis point to 1.311 percent, the super-long 30-year bond yields surged nearly 2 basis points to 1.831 percent and the yield on the short-term 2-year traded nearly 2 basis points higher at 0.835 percent.

The Japanese government bonds remained narrowly mixed amid a quiet session ahead of the country’s national consumer price inflation (CPI) data for the month of December and industrial production for November, scheduled to be released today by 23:50GMT and January 18 by 04:30GMT respectively. The yield on the benchmark 10-year JGB note, which moves inversely to its price, rose 1/2 basis point to 0.006 percent, the yield on the long-term 30-year note hovered around 0.701 percent while the yield on short-term 2-year slumped nearly 17 basis points to -0.167 percent.

The Australian government bonds slumped across the curve during Asian trading session as the UK government led by Prime Minister Theresa May survived a no-confidence vote a day after the heavy defeat of her Brexit deal. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 1 basis point to  2.286 percent, the yield on the long-term 30-year bond climbed 1/2 basis point to 2.830 percent and the yield on short-term 2-year up 1/2 basis point to 1.872 percent.

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July 2 15:00 UTC Released

DKCurrency Reserves

Actual

449.6 Stale

Forecast

Previous

451.7 Stale

July 2 13:45 UTC Released

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50 %

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48.6 %

January 31 00:00 UTC 775686775686m

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January 22 19:00 UTC 787506787506m

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January 22 19:00 UTC 787506787506m

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January 31 00:00 UTC 775686775686m

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January 31 00:00 UTC 775686775686m

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Bln AR bln ARS

January 31 00:00 UTC 775686775686m

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