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Europe Roundup: Euro eases on Eurozone growth concerns, gold off 6-year peak amid improving risk sentiment, European shares surge - Thursday, August 8th, 2019

Market Roundup

  • Bank of France forecasts third-quarter French economic growth at 0.3%
     
  • Prolonged uncertainty weighs on eurozone growth outlook: ECB
     
  • China July new loans seen lower, more policy easing expected as trade woes build: Reuters poll
     
  • China surprises with best export growth since March, but imports remain weak
     
  • China's July coal imports jump 21% on strong summer power demand
     

Economic Data Ahead

  • (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have stayed unchanged at 215,000 for the week ended August 2, while continuing claims for the week ended July. 26 is expected to decline to 1.690 million from the previous week's reading of 1.699 million.
     
  • (0830 ET/1230 GMT) Statistics Canada releases its New Housing Price Index (NHPI) for the month of June. The index eased 0.1 percent in May.
     
  • (1000 ET/1400 GMT) The U.S. Census Bureau is likely to report that wholesale inventories rose 0.2 percent in June after posting similar gains in the prior month.
     
  • (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending August 2.
     

Key Events Ahead

  • No Significant Event Scheduled

FX Beat

DXY: The dollar index steadied, supported by Fed Chair Jerome Powell’s comments citing the last week's rate cut as a mid-cycle adjustment to policy that dampened expectations for aggressive easing. The greenback against a basket of currencies traded flat at 97.60, having touched a low of 97.21 on Tuesday, its lowest since July 22.

EUR/USD: The euro consolidated within narrow ranges after the European Central Bank stated that prolonged uncertainty is dampening the euro zone’s growth outlook, particularly for manufactured goods. The European currency traded flat at 1.1202, having touched a high of 1.1249 on Tuesday, its highest since July 19. Immediate resistance is located at 1.1263 (July 16 High), a break above targets 1.1322 (July 2 High). On the downside, support is seen at 1.1164 (38.2% retracement of 1.1026 and 1.1249), a break below could drag it below 1.1133 (5-DMA).

USD/JPY: The dollar tumbled against the Japanese yen amid growing expectations for more than a quarter-point rate cut from the U.S. Federal Reserve in September. The major was trading 0.2 percent down at 106.08, having hit a low of 105.49 on Wednesday, its lowest since Jan 3. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. consumer credit speech. Immediate resistance is located at 106.95 (38.2% retracement of 109.31 and 105.49), a break above targets 107.40 (50% retracement). On the downside, support is seen at 105.52 (Aug. 6 Low), a break below could take it lower at 104.65 (Jan. 3 Low).

GBP/USD: Sterling held firm above a 31-month low amid persistent uncertainty surrounding Britain's exit from the European Union by the new extended deadline on October 31. The major traded 0.1 percent up at 1.2182, having hit a low of 1.2079 last week, it’s lowest since Jan. 2017. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2253 (38.2% retracement of 1.2522 and 1.2079), a break above could take it near 1.2305 (61.8% retracement). On the downside, support is seen at 1.2079 (Aug. 1 Low), a break below targets 1.2017 (Jan 17, 2017, Low). Against the euro, the pound was trading flat at 92.18 pence, having hit a low of 92.49 on Tuesday, it’s lowest since Sept 2017.

USD/CHF: The Swiss franc eased as risk-sentiment improved after resilient Chinese trade data and Beijing’s efforts to slow a slide in the value of the renminbi encouraged investors to buy riskier currencies. The major trades 0.1 percent up at 0.9761, having touched a low of 0.9692 the day before; it’s lowest since September 27. On the higher side, near-term resistance is around 0.9800 (38.2% retracement of 0.9975 and 0.9703) and any break above will take the pair to next level till 0.9834 (50% retracement). The near-term support is around 0.9700, and any close below that level will drag it till 0.9650 (Sept. 6 Low).

Equities Recap

European shares rose, extending gains for the second straight session, as investors risk sentiment revived following a stronger-than-expected rebound in Chinese exports.

The pan-European STOXX 600 index surged 0.9 percent at 372.11 points, while the FTSEurofirst 300 gained 0.9 percent to 1,463.65 points.

Britain's FTSE 100 trades 0.2 percent up at 7,209.42 points, while mid-cap FTSE 250 rallied 0.6 to 19,056.19 points.

Germany's DAX rose 0.9 percent at 11,749.67 points; France's CAC 40 trades 1.3 percent higher at 5,336.63 points.

Commodities Recap

Crude oil prices declined, hovering towards a 7-month low as an escalation of U.S.-China trade tensions triggered concerns that a global economic slowdown would hurt crude demand. International benchmark Brent crude was trading 0.9 percent lower at $56.76 per barrel by 1042 GMT, having hit a low of $55.86 the day before, its lowest since January. U.S. West Texas Intermediate was trading 0.7 percent down at $51.95 a barrel, after falling as low as $50.51 on Wednesday, its lowest since the January.

Gold prices eased after rising above the key psychological level of $1,500 in the previous session on the back of uncertainties around U.S.-China trade war and a slew of interest rate cuts by global central banks  Spot gold was trading 0.3 percent down at $1,496.57 per ounce by 1045 GMT, having touched a high of $1,510.29 on Wednesday, its highest since April 2013. U.S. gold futures were down 0.4 percent at $1,513 an ounce.

Treasuries Recap

The yield on the U.S. benchmark 10-year Treasury yield recovered 15.3 basis points to 1.73 percent, the super-long 30-year bond yields jumped 14 basis points to 2.24 percent and the yield on the short-term 2-year traded 11.8 basis points higher at 1.611 percent.

The yield on the UK benchmark 10-year gilts, jumped 9 basis points to 0.513 percent, the 30-year yield rose nearly 9.2 basis points to 1.162 percent and the yield on the short-term 2-year recovered nearly 1.0 basis points to 0.469 percent.

The German 10-year bond yield, which moves inversely to its price, jumped 6.6 basis points to -0. 571 percent after hitting record low yesterday, the yield on 30-year note has shown a minor recovery of 11 basis points to 0.085 percent and the yield on short-term 2-year traded tad down at -0.85 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 %

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January 22 19:00 UTC 865392865392m

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January 22 19:00 UTC 865392865392m

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January 31 00:00 UTC 853572853572m

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Bln AR bln ARS

January 31 00:00 UTC 853572853572m

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