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  |   Market Roundups


Europe Roundup: World shares set for fourth month of gains, oil and gold prices flat ahead of Trump's policy speech, Sterling near 2-week low - Tuesday, February 28th, 2017

Market Roundup

  • EUR/USD +0.1%, USD/JPY -0.4%, GBP/USD -0.02%, DXY -0.1%         
  • DAX -0.1%, CAC -0%, Brent -0.2%, Gold -0.03% 
  • Yen inches higher ahead of Trump speech - Rtrs  
  • UK Feb GfK Consumer confidence -6 vs prev -5. -5 forecast 
  • BOE Hogg: Tolerance for temporary above target inflation will depend on events - Rtrs
  • Hogg - Forward guidance needs to cover things like BoE statements on how to exit
  • Sturgeon says UK PM May nudging Scotland towards second referendum - Rtrs  
  • One out of four investors expects euro zone to lose a member - survey - Rtrs 
  • Swiss KOF indicator rises to 107.2 in Feb, highest since late 2013 
  • Nearly half of Swiss industry may move operations abroad - poll - Rtrs 
  • Swedish Q4 GDP up 2.3% yr/yr vs 2.4% forecast 
  • Swedish retail sales rise 1.3% in Jan vs 1.2% prev. 1.2% forecast 

Economic Data Ahead

  • (0830 ET/1330 GMT) The U.S. Commerce Department is expected to report that GDP rose at a 2.1 percent annualized rate in the fourth quarter, instead of the 1.9 percent pace it estimated last month. 
  • (0830 ET/1330 GMT) The Statistics Canada reports producer prices for January. Canadian producer prices rose by 0.4 percent in December. 
  • (0900 ET/1400 GMT) The S&P Case-Shiller composite index for house prices is likely to have risen by 5.3 percent in December, compared with a year ago. 
  • (0945 ET/1445 GMT) The Chicago Purchasing Managers' Index likely rose to 52.3 in February from 50.3 in the previous month.
  • (1000 ET/1500 GMT) U.S. consumer confidence likely dropped to 111.0 in February from 111.8 in January. 
  • (1000 ET/1500 GMT) The Federal Reserve Bank of Richmond provides information on current activity in the manufacturing sector for the month of January.
  • (1630 ET/2130 GMT) API reports weekly crude oil stocks.

Key Events Ahead

  • (1130 ET/1630 GMT) The U.S. Department of Treasury auctions 52-week bills and 4-week bills. 
  • (1500 ET/2000 GMT) Philadelphia Fed President Patrick Harker, a voter on monetary policy who supports three hikes this year, speaks at Temple University, in Philadelphia, Pennsylvania.
  • (1530 ET/2030 GMT) San Francisco Fed President John Williams speaks on the economic outlook before the Santa Cruz Chamber of Commerce, in Santa Cruz, California. 
  • (1840 ET/2340 GMT) St. Louis Fed chief James Bullard gives presentation on the U.S. economy and monetary policy before the Spring 2017 George Washington University Alumni Lecture in Economics event, in Washington. 

FX Beat

DXY: U.S. Dollar index has once again declined after jumping till 101.27.It is currently trading around 100.96.     On the higher side, major resistance is around 101.73 and any break above will take the index till 102.06 (61.8% retracement of 103.82 and 99.23)/102.95 (Jan 1st 2017 high). The major support is around 100.60 (21- day MA) and any break below targets 100/99.25 (23.6% fibo).

EUR/USD: EUR/USD trades largely muted at around 1.0596 levels at the time of writing. The pair has been trading between 1.04936 and 1.06306 for the past three trading sessions. The potential AB=CD pattern may be completed at 1.05540 level. On the lower side, major support is around 1.05200 and any break below will drag the pair down till 1.04935 (Feb 22nd 2017 low)/1.04500. On the higher side, 1.06035 will be acting as minor resistance and any break above targets 1.06305/1.06790 level. Short term bearish invalidation only above 1.06800.

GBP/USD: Cable trades range bound, holds above 100-DMA at 1.2404. GBP/USD is facing strong support around 1.23800 and any break below confirms major trend reversal. On the lower side major weakness can be seen only below 1.2380 (Feb 15th low) and any violation below will drag the pair down till 1.234500 (50% retracement of 1.19860 and 1.27060). Any break below 1.23450 confirms further weakness, a decline till 1.2260/1.2200 likely. The minor trend reversal can be happen only above that 1.2580 level and any break above will take the pair till 1.2705 (Feb 2nd 2017 high)/1.27750 (Dec 6th 2016 high).The major resistance is around 1.2530 level.

USD/CHF: USD/CHF witnessed a sharp reversal erasing all of its gains recorded in the previous two trading sessions. The pair has once again declining after jumping till 1.01017. Any break above minor top formed at 1.01600 confirms minor bullishness, a jump till 1.02480 is likely. It is currently trading around 1.00494. Intraday outlook remains slightly bearish as long as resistance 1.010 (61.8% retracement of 1.01408 and 1.00319) holds. On the lower side, major support is around 1.0028 (trend line joining 0.98696 and 0.99646) and any break below targets 1.0012 (100- day EMA)/ 0.9960 (Feb 17th low)/0.9927 (Feb 8th low).

USD/JPY: Trump-led recovery in USD/JPY falters, the pair rejected shy of 20-DMA. Technicals are biased lower, we see scope for test of 100-DMA at 111.75, bearish reversal only on break above 20-DMA at 112.96. On hourly charts we see bearish MACD line crossover on signal line. Upside capped by 1H 100-SMA at 112.72. Focus remains on US prelim GDP figures and Trump’s interview ahead of his congressional address due later on Tuesday.

AUD/USD: Aussie dented on a sharp slowdown in the private sector credit growth. But upbeat current account deficit lent support. AUD/USD stalled declines and held strong 20-DMA support at 0.7667 to edge higher. Trend remains higher, but bearish RSI divergence raises scope for downside in the pair. We see reversal in trend only on break below 20-DMA at 0.7667. Test of 100-DMA at 0.7512 then likely.

EUR/GBP: Selling pressure around the British Pound intact in wake of renewed fears of another Scottish independence referendum.  EUR/GBP extends gains after break above 200-DMA on Monday's trade. Technicals support upside in the pair, RSI is biased higher and Stochs have rolled over from oversold levels. We see weakness only on close below 200-DMA at 0.8479. Developments around the French election will be in focus for fresh impetus on the Euro.

Equities Recap

World shares were on track for a fourth straight month of gains on Tuesday, as investors eyed a speech by U.S. President Donald Trump for signals on infrastructure spending and tax cuts. The European equities steadied on Tuesday, with a rally in shares of companies such as GKN and Meggitt following their encouraging results offset by weaker miners. The STOXX Europe 600 was flat in percentage terms by 1028 GMT. The Britain's FTSE 100 was down 0.1 pct, Germany's DAX slid 0.2 pct and France's CAC was trading flat.

In Asia, the Tokyo's Nikkei closed up 0.06 pct at 19,118.99, Seoul shares ended up 0.27 pct. China's CSI300 Index rose 0.2 pct at 3,452.81 points, while Shanghai Composite Index ended up 0.4 pct at 3,241.73 points. HK’s Hang Seng Index was down 0.8 pct at 23,740.73 points, up 1.6 pct for the month.

Commodities Recap

Global oil prices were flat and continued to trade in a tight range with OPEC's bullish production cuts offset by increasing crude production from the United States. Benchmarks Brent and West Texas Intermediate crude oil were trading several cents on either side of the previous day's close. By 0930 GMT, Brent was 3 cents higher at $55.96 a barrel while the U.S. benchmark was 3 cents lower at 54.02.

Gold prices were also steady after falling from a 3-1/2 month high in the previous session, ahead of Trump's speech later in the day for more clarity on the economic policy. Spot gold rose 0.1 percent at $1,253.93 per ounce at 0734 GMT. U.S. gold futures dropped 0.3 percent to $1,254.50.

Treasuries Recap

U.S.: The U.S. Treasuries traded modestly lower on expectations of an upbeat reading of the gross domestic product during the Q4; also, investors are eyeing President Donald Trump’s speech scheduled for later in the day. The yield on the benchmark 10-year Treasury fell nearly 1 basis point to 2.36 percent, the super-long 30-year bond yield slumped close to 1-1/2 basis points to 2.97 percent and the yield on short-term 2-year note also remained nearly 1-1/2 basis points down at 1.19 percent.

UK: The UK gilts slumped as investors remain cautious ahead of the manufacturing as well as construction PMI, scheduled to be released on Wednesday. The yield on the benchmark 10-year gilts, rose nearly 2-1/2 basis points to 1.17 percent, the super-long 30-year bond yields also jumped over 1-1/2 basis points to 1.78 percent and the yield on the short-term 2-year traded higher by nearly 2 basis points at 0.11 percent.

German: The German government bunds remain subdued as investors traded cautiously ahead of the release of unemployment and CPI data for the month of February, scheduled for Wednesday. The yield on the benchmark 10-year bonds, rose nearly 1 basis point to 0.21 percent, the long-term 30-year bond yields also jumped 1-1/2 basis points to 0.98 percent while the yield on short-term 2-year bond moved higher by 1 basis point to -0.91 percent.

JGBs: The Japanese government bonds traded tad lower, following upbeat data on retail sales and housing starts; however, fall in the country’s January industrial production offset losses in bond market. The benchmark 10-year bond yield, rose 1/2 basis point to 0.05 percent, the long-term 20-year bond yields also pushed higher by 1/2 basis point to 0.62 percent and the yield on the short-term 3-year note traded nearly 1/2 basis point up at -0.18 percent.

NZ: The New Zealand government bonds traded slightly higher, following worse-than-expected trade deficit for the month of January. The yield on the benchmark 10-year bond, fell 1 basis point to 3.25 percent at the time of closing, the yield on 7-year note also slipped nearly 1 basis point 2.84 percent and the yield on short-term 2-year note traded 1 basis point lower at 2.19 percent.

AUS: The Australian 10-year government bond yields jumped as investors wait to read the country’s fourth-quarter gross domestic product (GDP), scheduled to be released on March 1. The yield on the benchmark 10-year Treasury note, surged nearly 3 basis points to 2.74 percent, the yield on 15-year note rose nearly 2-1/2 basis points to 3.18 percent and the yield on short-term 2-year also jumped 2 basis points to 1.82 percent.

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