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Europe Roundup: Sterling trims gains as EU rejects Britain's free trade on financial services proposal, euro rallies on upbeat CPI figures, markets eye FOMC policy outcome - Wednesday, January 31st, 2018

Market Roundup

  • Brazil Dec unemployment rate decrease to 11.8 % (forecast 11.9 %) vs previous 12 %
     
  • Indonesia Dec m2 money supply yy decrease to 8.3 % vs previous 9.3 %
     
  • Greece Nov retail sales yy decrease to -2.9 % vs previous -1 % (revised from -1.1 %)
     
  • Eurozone Dec unemployment rate stays flat at 8.7 % (forecast 8.7 %) vs previous 8.7 %
     
  • Eurozone Jan inflation ex food & enr flash increase to 1.2 % (forecast 1 %) vs previous 1.1 %
     
  • Eurozone Jan inflation, flash yy decrease to 1.3 % (forecast 1.3 %) vs previous 1.4 %
     
  • Norway Feb CB currency purchase stays flat at -900 mln no vs previous -900 mln no
     
  • Switzerland Jan investor sentiment decrease to 34.5 vs prev 52
     
  • Italy Dec unemployment rate decrease to 10.8 % (forecast 10.9 %) vs previous 10.9 % (revised from 11 %)
     
  • Germany Jan unemployment total sa decrease to 2.415 mln vs previous 2.439 mln (revised from 2.442 mln)
     

Economic Data Ahead

  • (0815 ET/1315 GMT) Payrolls processor ADP releases U.S. employment report for the month of January. The report is expected to show that 185,000 jobs were added as compared with 250,000 jobs in December.
     
  • (0830 ET/1330 GMT) The U.S. Labor Department will release its employment cost index for the fourth quarter. The index is expected to rise 0.6 percent after surging 0.7 percent in the previous quarter.. 
     
  • (0830 ET/1330 GMT) The Statistics Canada releases its Raw Material Price Index for the month of December. The index posted a rise of 5.5 percent in November.
     
  • (0830 ET/1330 GMT) The Statistics Canada will report its industrial producer prices for the month of December. The indicator rose 1.4 percent in the prior month.
     
  • (0830 ET/1330 GMT) The Statistics Canada is expected to report that gross domestic product increased 0.4 percent in November after staying flat in October.
     
  • (0945 ET/1445 GMT) Chicago Purchasing Managers' Index is likely to show that business conditions declined to 64.1 in January from 67.8 last month.
     
  • (1000 ET/1500 GMT) The National Association of Realtors is likely to report that U.S. pending home sales increased 0.4 percent in December after rising 0.2 percent in November.
     
  • (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending January 26.
     
  • (1730 ET/2230 GMT) Australian Industry Group (AiG) releases its performance of manufacturing index for the month of January. The index stood at 56.2 in December.
     
  • (1850 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending January 26.
     
  • (1850 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending January 26.

Key Events Ahead

  • (1400 ET/1900 GMT) The Federal Reserve's Federal Open Market Committee is due to conclude a two-day meeting and announce its decision on interest rates.

FX Beat

DXY: The dollar index tumbled towards multi-years lows as U.S. President Donald Trump's first State of the Union address failed to offer any support to the dollar bulls. The greenback against a basket of currencies traded 0.3 percent down at 88.92 having touched a low of 88.44 on Friday, its lowest since December 2014. FxWirePro's Hourly Dollar Strength Index stood at -82.72 (Slightly Bearish) by 1000 GMT.

EUR/USD: The euro rallied above the 1.2400 handle after data showed the Euro zone’s preliminary consumer price index rose at an annualized rate of 1.4 percent in January, while preliminary core-CPI grew 0.9 percent, just below estimate of 1.0 percent. The European currency traded 0.3 percent up at 1.2444, having touched a low of 1.2336 on Tuesday, its lowest since Jan. 24. FxWirePro's Hourly Euro Strength Index stood at 88.91 (Slightly Bullish) by 1000 GMT. Immediate resistance is located at 1.2500, a break above targets 1.2590. On the downside, support is seen at 1.2307 (38.2% retracement of 1.2264 and 1.2537), a break below could drag it lower 1.2252 (23.6% retracement).

USD/JPY: The dollar consolidated within a narrow range as investors awaited the U.S. Federal Reserve's monetary policy statement, where it is widely expected to keep interest rates unchanged, but take a more confident stance about the outlook of the economy. The major was trading flat at 108.81, having hit a low of 108.28 on Friday, its lowest since Sept 11. FxWirePro's Hourly Yen Strength Index stood at -9.35 (Neutral) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. ADP employment report, pending home sales and FOMC meeting outcome for further momentum. Immediate resistance is located at 109.52 (61.8% retracement of 111.49 and 108.28), a break above targets 109.90 (50.0% retracement). On the downside, support is seen at 108.20, a break below could take it lower 108.00.

GBP/USD: Sterling trimmed gains against the dollar and euro on news that European Commission officials had rejected the City of London's proposal that would allow finance companies to operate in each others' markets without barriers. The major traded flat at 1.4149, having hit a high of 1.4345 on Thursday, it’s highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at -183.10 (Highly Bearish) by 1000 GMT. Immediate resistance is located at 1.4263, a break above could take it near 1.4300. On the downside, support is seen at 1.4030 (10-DMA), a break below targets 1.3904 (50.0% retracement of 1.3458 and 1.4345). Against the euro, the pound was trading 0.4 percent down at 87.96 pence, having hit a low of 88.33 pence in the prior session; it’s lowest since Jan. 22

USD/CHF: The Swiss franc rose, extending previous session gains as the greenback eased on U.S. President Donald Trump's first State of the Union address. The major trades 0.2 percent down at 0.9326, having touched a low of 0.9290 on Thursday, it’s lowest since August. 2015. FxWirePro's Hourly Swiss Franc Strength Index stood at 5.57 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 0.9434 (61.8% retracement of 0.9666 and 0.9290) and any break above will take the pair to next level till 0.9479 (50.0% retracement). The near-term support is around 0.9308 and any close below that level will drag it to next level till 0.9260.

Equities Recap

European shares rebounded from previous session lows following a mixed bag of results from companies, while the greenback came under renewed pressure ahead of the Federal Reserve's first meeting of the year.

The pan-European STOXX 600 index rallied 0.06 percent to 396.20 points, while the FTSEurofirst 300 index edged up 0.05 percent to 1,557.90 points.

Britain's FTSE 100 trades 0.05 percent higher at 7,588.90 points, while mid-cap FTSE 250 gained 0.2 percent to 20,339.96 points.

Germany's DAX rose 0.1 percent at 13,215.76 points; France's CAC 40 trades 0.2 percent up at 5,482.11 points.

Commodities Recap

Crude oil prices declined to multi-week lows after an industry report showed U.S. crude stocks rose more than expected last week, while a selloff in other commodities added to investors' bearish sentiment. International benchmark Brent crude was trading 0.5 percent down at $68.16 per barrel by 1030 GMT, having hit a low of $67.82 earlier, its lowest since Jan. 9. U.S. West Texas Intermediate was trading 0.4 percent up at $64.19 a barrel, after falling as low as $63.64 earlier, its weakest since Jan. 22.

Gold prices rebounded from one-week lows hit in the previous session, as the dollar slumped against a basket of currencies, while markets awaited the outcome of the U.S. Federal Reserve's two-day meeting. Spot gold rose 0.4 percent to $1,343.05 per ounce by 1032 GMT, having hit a low of 1,334.33 the day before, lowest since Jan 23. U.S. gold futures for February delivery rose 0.4 percent to $1,339.80 per ounce.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.705 percent lower by 0.02 bps, while 5-year yield was 0.017 bps down at 2.112 percent.

The UK gilts rose ahead of the country’s manufacturing and construction PMIs for the month of January, scheduled to be disclosed on February 1 and 2 by 09:30GMT respectively. The yield on the benchmark 10-year gilts, slipped nearly 1 basis point to 1.44 percent, the super-long 30-year bond yields fell 1-1/2 basis points to 1.88 percent and the yield on the short-term 2-year traded flat at 0.61 percent.

The German bunds jumped Wednesday as investors shrugged-off the better-than-expected employment data for the month of January. Investors will now focus on the country’s 5-year auction, scheduled for later in the day for further direction in the debt market. The German 10-year bond yields, which move inversely to its price, slipped 1-1/2 basis points to 0.66 percent, the yield on 30-year note plunged nearly 4 basis points to 1.32 percent and the yield on short-term 2-year traded nearly 1 basis point lower at -0.53 percent.

The New Zealand government bonds ended Wednesday’s session on a sharp note despite a muted trading session that witnessed data of little economic significance. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1-1/2 basis points to 2.93 percent, the yield on 20-year plunged 2-1/2 basis points to 3.43 percent and the yield on short-term 2-year too ended 2-1/2 basis points lower at 1.95 percent.

The Japanese government bonds gained even as the country’s industrial output grew in December at the fastest pace in eight months, and up for a third straight month, in a sign that its humming factories have likely driven economic expansion for an eighth consecutive quarter. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1 basis point to 0.09 percent, the yield on the long-term 30-year note remained tad lower at 0.81 percent and the yield on short-term 2-year traded 1/2 basis point lower at -0.13 percent.

The Australian government bonds jumped sharply during early Asian session as the country’s fourth-quarter consumer price inflation data disappointed market expectations, although remaining unchanged on a q/q basis. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped nearly 4-1/2 basis points to 2.80 percent, the yield on the long-term 30-year note also plunged 4-1/2 basis points to 3.41 percent and the yield on short-term 2-year traded 6 basis points lower at 2.09 percent.

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February 16 15:30 UTC Released

USECRI Weekly Annualized

Actual

8.5 %

Forecast

Previous

8.8 %

February 16 15:30 UTC Released

USECRI Weekly Index

Actual

149.8 %

Forecast

Previous

152.2 %

January 31 00:00 UTC 2601326013m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

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Bln AR bln ARS

January 31 00:00 UTC 2601326013m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 22 19:00 UTC 3783337833m

ARTrade Balance

Actual

Forecast

Previous

-1541 %

January 31 00:00 UTC 2601326013m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 22 19:00 UTC 3783337833m

ARTrade Balance

Actual

Forecast

Previous

-1541 %

January 31 00:00 UTC 2601326013m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 2601326013m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 2601326013m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

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