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Europe Roundup: Sterling steadies near 7-week peak, euro at 2-month high amid Eurozone economic and political optimism, European shares advance - Monday, November 27th, 2017

Market Roundup

  • Rand shrugs off Friday's S&P downgrade: USD/ZAR off 3.15% at 13.7350
     
  • EUR/USD 0.03%, USD/JPY -0.24%, GBP/USD 0.07%, EUR/GBP -0.07%
     
  • DXY -0.09%, DAX 0.27%, FTSE 0.35%, Brent -0.39%, Gold 0.46%
     
  • Euro rally, German politics bolster bloc's bond markets
     
  • German government talks likely a month away, Merkel ally says
     
  • Italy Consumer Confidence Nov, 114.3, 116.4 forecast, 116.1 previous
     
  • Italy MFG Business Confidence Nov, 110.8, 111 previous
     
  • Oil slips on US drilling but OPEC cuts support market
     
  • Gold edges higher as dollar hits 2-month low vs euro

Economic Data Preview

  • (1000 ET/1500 GMT) The U.S. new home sales are expected to have decreased 6.3 percent to a seasonally adjusted annual rate of 625,000 units in October, after rising 18.9 percent to a seasonally adjusted annual rate of 667,000 units in September.
     
  • (1030 ET/1530 GMT) The Dallas Fed releases its Manufacturing Business Index for the month of November. The index posted a rise of 27.6 percent in the previous month.

Key Events Ahead

  • (1145 ET/1545 GMT) FedTrade Operation 30-year Ginnie Mae (max $1.280 bn)
     
  • (1830 ET/2330 GMT) the Federal Reserve Bank of Minneapolis President Neel Kashkari participates in a moderated question-and-answer session before an event hosted by Winona State University.
     
  • (1900 ET/0000 GMT) Federal Reserve Bank of New York President William Dudley participates in a moderated conversation, "U.S. Economy: 10 Years After the Crisis," organized by the University of Califoria, Berkeley, in New York.

FX Beat

DXY: The dollar index hovered near 2-month lows amid fading expectations for aggressive Fed rate hike moves in 2018. The greenback against a basket of currencies traded 0.1 percent lower at 92.67, having touched a low of 92.58 earlier, its lowest since Sept. 26. FxWirePro's Hourly Dollar Strength Index stood at -95.79 (Slightly Bearish) by 1000 GMT.

EUR/USD: The euro rallied to a fresh 2-month high above the 1.1900 handle, boosted by the upbeat economic data coming out of the Eurozone and renewed weakness in the U.S. dollar. The European currency traded 0.1 percent up at 1.1937, having touched a high of 1.1956 earlier in the session, its highest since Sept. 22. FxWirePro's Hourly Euro Strength Index stood at 62.98 (Bullish) by 1000 GMT. The pair is facing major psychological resistance at 1.2000 and any break above will take it to next till 1.20900. On the lower side, near-term support is around 1.18800 (Resistance turned into support) and any break below will drag it down till 1.1850 (23.6% fibo)/1.1800.

USD/JPY: The dollar eased towards a 2-month low touched last week on concerns that the Federal Reserves’ monetary policy tightening cycle could be more gradual than initially expected. The major was trading 0.2 percent down at 111.23, having hit a low of 111.07 on Thursday, its lowest since Sept. 18. FxWirePro's Hourly Yen Strength Index stood at -17.74 (Neutral) by 1000 GMT. On the lower side, any close below 111 confirms minor weakness, a decline till 110/108.15 likely. Any convincing close above 112.05 (233- day MA) will take the pair to next level till 112.70/113.36 likely.

GBP/USD: Sterling steadied after rising to a 7-week high on Friday, as investors worried about Brexit negotiations next month, including a resolution on the Northern Ireland border issue. The major traded 0.1 percent up at 1.3343, having hit a high of 1.3359 on Friday, it’s highest since Oct. 2. FxWirePro's Hourly Sterling Strength Index stood at 115.56 (Highly 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 1.32300 and any break below will drag it to next level till 1.3175/1.3130/1.3100/1.3060/1.30270.

USD/CHF: The Swiss franc retreated after rising to a 6-week earlier in the session, as the greenback steadied slightly against a basket of currencies. The major trades 0.2 percent up at 0.9809, having touched a low of 0.9778 earlier, it’s lowest since Oct. 20. FxWirePro's Hourly Swiss Franc Strength Index stood at 14.58 (Neutral) by 1000 GMT. On the lower side, near-term support is around 0.97730 (support turned into resistance)  and any break below will drag the pair to lower level till 0.9745/0.9705. The near-term resistance is around 0.9840 (233- day MA) and any violation above will take it to next level till 0.9875/0.9900.

AUD/USD: The Australian dollar rose to a near 2-week high as the greenback weakened on fading expectations for aggressive Fed rate hike moves in 2018. The Aussie trades 0.4 percent up at 0.7644, having hit a high of 0.7644 earlier; it’s highest since Nov. 14. FxWirePro's Hourly Aussie Strength Index stood at 20.06 (Neutral) by 1000 GMT. On the lower side, the near term support is around 0.7590 and any broke below will drag the pair till 0.7530/0.7500/0.7435. The near-term resistance is around 0.7640 (trendline resistance) and any break above targets 0.7680/0.7730/0.7780.

Equities Recap

European shares advanced, led higher by gains among insurance stocks, while euro rallied to a 2-month high, boosted by the optimism over the Eurozone growth expectations.

The pan-European STOXX 600 index gained 0.1 percent to 387.17 points, while the FTSEurofirst 300 index rallied 0.2 percent to 1,522.71 points.

Britain's FTSE 100 trades 0.3 percent higher at 7,432.99 points, while mid-cap FTSE 250 rose 0.1 percent to 19,959.69 points.

Germany's DAX fell 0.05 percent at 13,054.71 points; France's CAC 40 trades 0.2 percent rose at 5,403.13 points.

Commodities Recap

Crude oil prices declined after rising to multi-week highs, however, expectations that OPEC and other key exporters will agree this week to extend production limits provided support. International benchmark Brent crude was trading flat at $63.72 per barrel by 0922 GMT, having hit a high of $63.92 on Friday, its highest since Nov. 10. U.S. West Texas Intermediate was trading 0.7 percent lower at $58.54 a barrel, after rising as high as $59.02 last week, its highest since June 2015.

Gold prices edged up after falling for two straight sessions as the dollar touched a 2-month low against a basket of currencies. Spot gold rose 0.4 percent to $1,293.64 an ounce by 1047 GMT, having touched a low of $1,274.36 last week, its lowest since Nov. 14. U.S. gold futures for December delivery were up 0.2 percent at $1,290.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.347 percent higher by 0.007 bps, while 5-year yield was 0.017 bps up at 2.083 percent.

The German 10-year bond yields traded 0.16 bps lower at 0.357 percent and the yield on short-term 2-year traded 0.001 basis point higher at -0.698 percent.

The yield on the benchmark UK 10-year gilts rose 3 basis points to 1.254 percent, while the yield on the short-term 2-year traded 6 basis points higher at 0.467 percent.

The Japanese government bond prices dipped as cautious traders adjusted their positions ahead of a 40-year JGB auction amid worries about further cuts in the Bank of Japan's bond buying. The 10-year JGB yield climbed 1.0 basis point to 0.035 percent, while the benchmark December 10-year JGB futures price dipped 0.09 point to 150.93. The 30-year yield rose 1.5 basis points to 0.840 percent, its highest in three weeks.

The Australian government bond futures were mixed, with the three-year bond contract flat at 98.070. The 10-year contract inched 1.5 ticks higher to 97.4650. The New Zealand government bonds eased, with yields on the long-end up 1-1.5 basis points.

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BRRetail Sales YY*

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January 9 11:00 UTC 3375333753m

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0.35 %

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