Europe Roundup: Sterling steadies vs dollar as rate cut bets melt, European stocks falls, Gold dips on profit-taking, Oil falls as spectre of China virus looms over fuel demand-January 23rd, 2020

Market Roundup

• Spanish 3-Year Bonos Auction-0.236%,-0.391% previous        

• French 3-Year BTAN Auction -0.53%,-0.58% previous

• Brazil Jan Mid-Month CPI (YoY)  4.34%,4.30% forecast, 3.91% previous

• Brazil Jan Mid-Month CPI (MoM)  0.71%,0.70%  forecast, 1.05% previous  
 
Looking Ahead - Economic Data (GMT)    

• 13:00 Russia Central Bank Reserves (USD) 557.5B previous

• 13:00 Russia Dec Industrial Production (YoY) 1.4%,0.3% previous

• 13:30 US Continuing Jobless Claims 1,746K, 1,767K previous

• 13:30 US Initial Jobless Claims 215K, 204K previous

• 13:30  US Jobless Claims 4-Week Avg  216.25K previous    

• 15:00 US Dec Leading Index (MoM)   0.1%,0.0% previous    

• 15:00 EU Jan Consumer Confidence -7.8, -8.1  previous    

• 16:00 US Jan KC Fed Composite Index  -8 previous

• 16:00 US Jan KC Fed Manufacturing Index -6, -7 previous

• 18:00 Brazil CAGED Net Payroll Jobs 99.23K previous

Looking Ahead - Economic Data (GMT) 
   
• 13:30  ECB Press Conference

Currency Summaries

EUR/USD: The euro was steady against the U.S. dollar on Thursday, as investors awaited European Central Bank (ECB) meeting. The ECB introduced a stimulus program in September and data since then have suggested some improvement in the euro zone’s economy, so analysts doubt ECB boss Christine Lagarde will announce much on Thursday. Investors will focus on her answers to questions about the ECB’s strategic review, which could see changes to its inflation target. Immediate resistance can be seen at 1.1118(11 DMA), an upside break can trigger rise towards 1.1131(21 DMA).On the downside, immediate support is seen at 1.1065 (100 DMA), a break below could take the pair towards 1.1000 (Psychological level).

GBP/USD: Sterling was little changed against dollar on Thursday as data this week reduced market expectations of a central bank rate cut as early as next week. Data this week showed the Confederation of British Industry reporting a pick-up in manufacturers’ sentiment, while jobs data on Tuesday showed the British economy created jobs at its strongest rate in nearly a year in the three months to November. The focus now is Friday’s January purchasing managers’ index, widely viewed as a forward-looking indicator that could swing the rate debate one way or another. Immediate resistance can be seen at 1.3153 (Daily high), an upside break can trigger rise towards 1.3200 (Psychological level).On the downside, immediate support is seen at 1.3059 (5 DMA), a break below could take the pair towards 1.3900 (Psychological level).

USD/CHF: The dollar little changed against the Swiss franc on Thursday, as the focus in Europe turned to European Central Bank meeting. Investors’ awaited a monetary policy meeting by the European Central Bank, where ECB President Christine Lagarde is also set to launch a broad review of its policy that is likely to see her redefine the central bank’s main goal and how to achieve it. At (GMT 12:51), Greenback gained 0.03% versus the Swiss franc to 0.9681. Immediate resistance can be seen at 0.9685(11 DMA), an upside break can trigger rise towards 0.9705 (21 DMA).On the downside, immediate support is seen at 0.9672 (Daily Low), a break below could take the pair towards 0.9625 (Lower BB).

USD/JPY: The dollar dipped against the Japanese yen on Thursday, as investors grew more anxious about the spread of a virus in China. Deaths from the flu-like coronavirus stand at 17. Almost 600 people are infected and China has locked down Wuhan, a city of 11 million people, where the outbreak was believed to have originated at an animal market. The yen rallied 0.3% to 109.57 after earlier reaching 109.50 yen per dollar, its strongest since Jan. 13 Strong resistance can be seen at 109.96 (9 DMA), an upside break can trigger rise towards 110.55 (Higher BB).On the downside, immediate support is seen at 109.35 (21 DMA), a break below could take the pair towards 109.00(Psychological level). 

Equities Recap

European shares fell on Thursday, hit by worries over the spread of a new flu-like virus in China, with investors also bracing for the European Central Bank’s first policy decision of the year.    

At (GMT 12:51),UK's benchmark FTSE 100 was last trading lower at 0.37 percent, Germany's Dax was down by 0.48 percent, France’s CAC was last down by 0.13 percent.

Commodities Recap

Gold eased on Thursday as investors booked profits from recent rallies but held above the $1,550 technical support level on continuing low interest rates and a drop in risk appetite.

Spot gold was down 0.3% at $1,554.24 an ounce by 1127 GMT. U.S. gold futures fell 0.2% to $1,553.80.

Oil prices fell on Thursday on concern that the spread of a respiratory virus from China could lower fuel demand if it stunts economic growth in an echo of the SARS epidemic nearly 20 years ago.

Brent crude futures   were down 88 cents, or 1.39%, at $62.33 a barrel by 1225 GMT, having earlier touched their lowest since Dec. 4. They lost 2.1% in the previous session.

Treasuries Recap

U.S.: The U.S. Treasuries surged during Thursday’s afternoon session ahead of the country’s initial jobless claims, scheduled to be released today by 13:30GMT, along with the 10-year auction, also due today at 18:00GMT. The yield on the benchmark 10-year Treasury yield slumped nearly 3 basis points to 1.743 percent, the super-long 30-year bond yield also plunged 3 basis points to 2.189 percent and the yield on the short-term 2-year lost 1-1/2 basis points to trade at 1.512 percent.

EUR: The German bunds jumped during European trading session Thursday ahead of the European Central Bank’s (ECB) monetary policy meeting, scheduled to be held today by 12:45GMT, followed by the bank’s press conference, due at 13:30GMT. The German 10-year bond yield, which moves inversely to its price, slumped 2 basis points to -0.280 percent, the long-term 30-year yield suffered 1-1/2 basis points to 0.231 percent and the yield on short-term 2-year remained tad down at -0.595 percent.

AUS: The Australian bonds traded mixed during Asian session Thursday after the country’s employment report for the month of December exceeded market expectations, amid the increase in the number of cases and geographical spread of the Wuhan coronavirus. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, remained flat at 1.117 percent, the yield on the long-term 30-year bond slipped 1-1/2 basis points to 1.720 percent while the yield on short-term 2-year jumped 3 basis points to trade at 0.760 percent.