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  |   Market Roundups


Europe Roundup: Sterling at 1-week peak, Swiss franc, yen rally as greenback slumps on dovish Fed; European shares at 6-week high - Thursday, June 20th, 2019

Market Roundup

  • EUR/USD 0.71%, USD/JPY -0.28%, GBP/USD 0.63%, EUR/GBP 0.12%
  • DXY -0.48%, DAX 0.99%, FTSE 0.42%, Brent 2.26%, Gold 1.69%
  • Oil jumps as Iran shoots down U.S. drone in Gulf
  • Great Britain May Retail Sales MM, -0.5%, -0.5% f'cast, 0.0% prev
  • Great Britain May Retail Sales YY, 2.3%, 2.7% f'cast, 5.2% prev
  • Great Britain May Retail Sales Ex-Fuel MM, -0.3%, -0.4% f'cast, -0.2% prev -0.3% rvsd
  • Great Britain May Retail Sales Ex-Fuel YY, 2.2%, 2.5% f'cast, 4.9% prev 4.7% rvsd
  • Brexit campaigner Johnson far ahead in race to lead Britain
  • China, U.S. to resume trade talks but China says demands must be met
  • Worried by trade tensions, ECB considering new stimulus - Rehn
  • BOJ joins Fed in signaling easing if needed, keeps policy steady for now
  • Alone among peers, Norway raises rates, eyes two more hikes'

Economic Data Ahead

  • (0830 ET/1230 GMT) The U.S. Commerce Department is likely to report that current account deficit narrowed to $124.6 billion in the first quarter from $134.4 billion in the previous quarter.
  • (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 2,000 to a seasonally adjusted 220,000 for the week ended Jun. 14, while continuing claims for the week ended Jun. 7 is expected to decline to 1.688 million from a previous reading of 1.695 million.
  • (0830 ET/1230 GMT) Philadelphia Federal Reserve manufacturing survey is likely to show that business activity decreased to 11.0 in June from 16.5 in May.
  • (0815 ET/1215 GMT) The ADP releases U.S. employment report for the month of May. The report showed that 61,700 jobs were added in April.
  • (1000 ET/1400 GMT) The European Commission releases Eurozone's preliminary Consumer Confidence reading for the month of June. The index posted a final reading of -6.5 in the prior month.
  • (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending June 14.

Key Events Ahead

  • (1400 ET/1800 GMT) UK Finance Minister Philip Hammond and BoE's Mark Carney make annual Mansion House speeches in London

FX Beat

DXY: The dollar index slumped as the Federal Reserve joined its global peers such as the European Central Bank and the Reserve Bank of Australia this week in signaling that more policy stimulus is required to boost growth. The greenback against a basket of currencies traded 0.6 percent down at 96.66, having touched a low of 96.64 earlier, its lowest since June 12. FxWirePro's Hourly Dollar Strength Index stood at -148.99 (Highly Bearish) by 1000 GMT.

EUR/USD: The euro rallied to a 1-week peak above the 1.1300 handle after officials said the European Commission was unlikely to recommend further steps next week in disciplinary procedures over Italy's rising debt. The European currency traded 0.7 percent up at 1.1302, having touched a high of 1.1306 earlier, its highest since June 12. FxWirePro's Hourly Euro Strength Index stood at 35.49 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1316 (78.6% retracement of 1.1347 and 1.1202), a break above targets 1.1347 (June 7 High). On the downside, support is seen at 1.1172 (May 24 Low), a break below could drag it below 1.1141 (May 21 Low).

USD/JPY: The dollar plunged to a 5-1/2 month low after the U.S. Federal Reserve signalled it was ready to cut interest rates as early as next month. The pair was trading 0.3 percent down at 107.80, having hit a low of 107.46 earlier, its lowest since Jan. 3. FxWirePro's Hourly Yen Strength Index stood at -115.95 (Highly Bearish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. current account, unemployment claims and Philadelphia Fed manufacturing survey. Immediate resistance is located at 108.56 (June 6 High), a break above targets 109.08 (Jan. 8 High). On the downside, support is seen at 107.18 (June 3 Low), a break below could take it lower at 106.88.

GBP/USD: Sterling rallied above the 1.2700 handle to hit a 1-week high, as the greenback tumbled after the Federal Reserve signalled possible interest rate cuts as early as next month to combat growing global and domestic risks. The major traded 0.6 percent up at 1.2720, having hit a high of 1.2726 earlier it’s highest since Jun. 12. FxWirePro's Hourly Sterling Strength Index stood at -4.06 (Neutral) 1000 GMT. Immediate resistance is located at 1.2763 (June 7 High), a break above could take it near 1.2813 (May 21 High). On the downside, support is seen at 1.2580 (Jun. 14 Low), a break below targets 1.2506. Against the euro, the pound was trading 0.05 percent at 88.84 pence, having hit a high of 88.72 earlier, it’s highest since Jun. 7.

USD/CHF: The Swiss franc surged to a 1-week peak as risk-sentiment weakened amid persisting global geopolitical tensions and major global central bank easing concerns. The major trades 0.8 percent down at 0.9864, having touched a low of 0.9858 earlier; it’s lowest since June 5. FxWirePro's Hourly Swiss Franc Strength Index stood at -10.37 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 0.9920 (June 10 High) and any break above will take the pair to next level till 0.9963 (June 6 High). The near-term support is around 0.9813 (Jan. 11 Low), and any close below that level will drag it till 0.9788 (Jan 8 Low).

Equities Recap

European shares rallied to a 6-week peak on signs that Brussels will hold off on disciplinary action over Italy's budget.

The pan-European STOXX 600 index surged 0.7 percent at 387.48 points, while the FTSEurofirst 300 rallied 0.7 percent to 1,525.50 points.

Britain's FTSE 100 trades 0.4 percent up at 7,432.48 points, while mid-cap FTSE 250 gained 0.9 to 19,408.16 points.

Germany's DAX rose 1.01 percent at 12,433.12 points; France's CAC 40 trades 0.8 percent higher at 5,561.14 points.

Commodities Recap

Crude oil prices surged more than 3 percent to hit a 3-week peak after Iran shot down a U.S. military drone, raising fears of a military confrontation between Tehran and Washington.  International benchmark Brent crude was trading 1.8 percent higher at $63.35 per barrel by 1013 GMT, having hit a high of $63.86 earlier, its highest since June 11. U.S. West Texas Intermediate was trading 2.8 percent up at $55.61 a barrel, after rising as high as $55.84 earlier, its highest since the May 31.

Gold prices rose to their highest level in more than five years as the greenback plunged after the U.S. Federal Reserve signalled possible interest rate cuts later this year. Spot gold was trading 1.6 percent up at $1,381.95 per ounce by 1017 GMT, having touched a high of $1,393.85, its highest since Sept. 2013. U.S. gold futures jumped 2.8 percent to $1,386.30 an ounce, after touching their highest since April 2018 at $1,397.70.

Treasuries Recap

The U.S. Treasury yields plunged during the afternoon session after the Federal Reserve kept interest rates unchanged at its monetary policy meeting held late yesterday, while striking a dovish tone, indicating further rate cuts this year. The yield on the benchmark 10-year Treasury yield slipped 1 basis point to 2.016 percent, the super-long 30-year bond yields edged 1/2 basis point lower to 2.534 percent while the yield on the short-term 2-year slumped 4-1/2 basis points to 1.722 percent.

The German bunds jumped during European trading session ahead of the euro area’s preliminary consumer confidence index for the month of June, scheduled to be released today by 14:00GMT. The German 10-year bond yields, which move inversely to its price, slumped nearly 2-1/2 basis points to -0.309 percent, the yield on 30-year note plunged nearly 4 basis points to 0.267 percent and the yield on short-term 2-year traded nearly 2-1/2 basis points lower at -0.735 percent.

The Australian 10-year government bond yield hit an all-time low during Asian session, tracking a breach of key psychological level in the United States counterpart, which fell below the 2 percent level for the first time since November 2016 The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 5-1/2 basis points to 1.293 percent, the yield on the long-term 30-year bond also plummeted 5-1/2 basis points to 1.964 percent and the yield on short-term 2-year also slumped 5-1/2 basis points to 0.934 percent.

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