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Europe Roundup: Sterling at 1-week trough amid no-Brexit deal fears, gold at 14-month peak as Chinese data rekindles global economic growth concerns, investors’ eye U.S. retail sales - Friday, June 14th, 2019 

Market Roundup

  • EUR/USD -0.05%, USD/JPY -0.17%, GBP/USD -0.16%, EUR/GBP 0.09%
  • DXY 0.04%, DAX -0.71%, FTSE -0.47%, Brent -0.18%, Gold 0.98%
  • China's May industrial output growth cools to 17-yr low as trade war escalates
  • Oil slips as demand concerns outweigh Mideast geopolitics
  • U.S. blames Iran for attack on oil tankers, Tehran calls accusation alarming
  • China hikes anti-dumping duties on some U.S., EU steel tubes and pipes
  • Japan, U.S. deepened understanding over positions on trade - Motegi
  • Negative ECB rates so far neutral for bank profits -Draghi
  • Russian cenbank cuts key interest rate to 7.5 pct from 7.75 pct - lowers growth forecast
  • Pause over, Germany's 10-year bond yield hits new record low
  • Germany May Wholesale Price Index MM, 0.3%, 0.6% prev
  • Germany May Wholesale Price Index YY, 1.6%, 2.1% prev

Economic Data Ahead

  • (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that retail sales rose 0.6 percent in May after easing 0.2 percent in April. While excluding autos, retail sales are likely to have gained 0.3 percent, after surging 0.1 percent in the previous month.
  • (0915 ET/1315 GMT) The Federal Reserve is likely to report that industrial production rose 0.2 percent in May, after decreasing 0.5 in the prior month.
  • (0915 ET/1315 GMT) The Federal Reserve Board is expected to report that capacity utilization edged up to 78.0 percent in May from 77.9 percent in April.
  • (1000 ET/1400 GMT) The University of Michigan is likely to report that U.S. preliminary consumer sentiment index declined to 98.0 in June, after posting a final reading of 100.0 in May.
  • (1000 ET/1400 GMT) The U.S. Commerce Department is expected to report that business inventories rose 0.5 percent in April after staying flat in March.
  • (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count. 

Key Events Ahead

  • (0855 ET/1255 GMT) BoE's Mark Carney attends Women in Banking & Finance 22nd Anniversary Awards for Achievement lunch in London

FX Beat

DXY: The dollar index rallied as investors expect U.S. retail sales growth to reach 0.6 percent in May, as compared with 0.1 percent decline in April. The greenback against a basket of currencies traded 0.1 percent up at 97.09, having touched a high of 97.14, its highest since June 7. FxWirePro's Hourly Dollar Strength Index stood at 118.35 (Highly Bullish) by 1000 GMT.

EUR/USD: The euro plunged to a 1-week low, as geopolitical tension intensified in the bloc after French Finance Minister Bruno Le Maire stated that Italy should clarify in the next few days how it intends to avert a European Union disciplinary action over its rising debt.  The European currency traded 0.1 percent down at 1.1269, having touched a low of 1.1260 earlier, its lowest since June 7. FxWirePro's Hourly Euro Strength Index stood at -11.12 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1309 (June 6 High), a break above targets 1.1359 (Mar. 18 High). On the downside, support is seen at 1.1235 (April 22 Low), a break below could drag it below 1.1201 (May 14 Low).

USD/JPY: The dollar slumped to a 1-week trough as Chinese data rekindled worries about the health of the global economy, while fears of a new U.S.-Iran confrontation intensified. Moreover, the U.S.- China trade dispute and reports that India is preparing to impose higher tariffs on some U.S. goods boosted the bid tone around the safe-haven Japanese yen. The pair was trading 0.2 percent down at 108.20, having hit a low of 108.15, its lowest since June 7. FxWirePro's Hourly Yen Strength Index stood at 94.87 (Slightly Bullish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. retail sales, capacity utilization, industrial production and business inventories. Immediate resistance is located at 108.87 (50.0% retracement of 109.92 and 107.81), a break above targets 109.47 (78.6% retracement). On the downside, support is seen at 107.88 (June 3 Low), a break below could take it lower at 107.51 (Jan. 4 Low).

GBP/USD: Sterling tumbled to an 11-day low after Brexiteer Boris Johnson moved closer to becoming the next prime minister of Britain. Investors are concerned that May's successor will lead Britain towards a no-deal Brexit and with little time in hand how will the successor try and renegotiate May's withdrawal agreement with Brussels. The major traded 0.1 down at 1.2653, having hit a low of 1.2633 earlier; it’s lowest since June 3. FxWirePro's Hourly Sterling Strength Index stood at 26.78 (Neutral) 1000 GMT. Immediate resistance is located at 1.2742 (June 6 High), a break above could take it near 1.2798 (May 17 High). On the downside, support is seen at 1.2610 (June 3 Low), a break below targets 1.2580 (May 30 Low). Against the euro, the pound was trading 0.1 percent down at 89.03 pence, having hit a low of 89.32 on Tuesday, it’s lowest since Jan. 15.

USD/CHF: The Swiss franc declined to an over 1-week low, as the greenback surged on expectations that stronger U.S. retail sales might undermine some of the bets on U.S. rate cuts in the coming weeks. The major trades 0.2 percent up at 0.9955, having touched a high of 0.9967 earlier; it’s highest since June 3. FxWirePro's Hourly Swiss Franc Strength Index stood at -60.95 (Bearish) by 1000 GMT. On the higher side, near-term resistance is around 0.9987 (April 3 High) and any break above will take the pair to next level till 1.0121 (May 17 High). The near-term support is around 0.9879 (June 6 Low), and any close below that level will drag it till 0.9820 (Dec. 20 Low).

Equities Recap

European shares tumbled, weighed down by losses in technology shares, while investors await the U.S. retail sales data for further insights into the state of domestic demand in the economy.

The pan-European STOXX 600 index slumped 0.4 percent at 378.92 points, while the FTSEurofirst 300 plunged 0.5 percent to 1,489.28 points.

Britain's FTSE 100 trades 0.3 percent down at 7,344.18 points, while mid-cap FTSE 250 declined 0.2 to 19,137.09 points.

Germany's DAX fell 0.6 percent at 12,097.14 points; France's CAC 40 trades 0.2 percent lower at 5,364.21 points.

Commodities Recap

Crude oil prices declined on fears that trade disputes will dent global oil demand, although the downside was limited as the attacks this week on two oil tankers in the Gulf of Oman supported prices. International benchmark Brent crude was trading 0.1 percent lower at $61.20 per barrel by 0938 GMT, having hit a low of $59.55 on Wednesday, its lowest since June 5. U.S. West Texas Intermediate was trading 0.1 percent up at $52.12 a barrel, after falling as low as $50.71 on Wednesday, its lowest since the June 5.

Gold prices rallied by more than 1 percent to hit its highest level since April last year, as a spur of weak economic data from both China and the United States, and political concerns in the Middle East boosted the safe-haven's demand. Spot gold rose 0.8 percent to $1,352.87 per ounce by 0941 GMT, having touched a high of $1,358.06 earlier, its highest level since April 11, 2018. and had risen 1.1 percent so far this week, putting it on track for its fourth consecutive weekly gain. U.S. gold futures jumped 1.2 percent to $1,359.50 an ounce.

Treasuries Recap

The German benchmark 10-year bond yield fell more than 2 basis points to minus 0.267 percent, a record low. Across the single-currency bloc, 10-year bond yields were 2 to 3 bps lower, with French and Dutch long-dated bond yields within sight of recent lows. Spain's 10-year bond yield touched a record low at 0.498 percent.

The Japanese government bond prices broadly rose, with the benchmark 10-year JGB yield and the 20-year yield losing one basis point each, to minus 0.125 percent and 0.245 percent, respectively. The short-dated maturities were a shade stronger, with the two-year yield and the five-year yield off half-a-basis point each, at minus 0.205 percent and minus 0.235 percent, respectively.

The Australian three-year bond contract hit a record high and was last up 1 tick at 99.005. The 10-year contract gained 2.75 ticks to 98.6125, implying a yield of 1.39 percent. The yields on two-year New Zealand paper dropped to an all-time trough of 1.21 percent.

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