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Europe Roundup: Sterling at 5-1/2 month trough on no-deal Brexit fears, euro plunges after ECB's Draghi hints of more stimulus, European shares rebound - Tuesday, June 18th, 2019

Market Roundup

  • EUR/USD -0.3%, USD/JPY -0.25%, GBP/USD -0.08%, EUR/GBP -0.22%
     
  • DXY 0.16%, DAX 0.73%, FTSE 0.51%, Brent -0.71%, Gold 0.48%
     
  • Draghi puts further ECB easing firmly on the table
     
  • EU May HICP Final MM, 0.1%, 0.2% f'cast, 0.7% prev
     
  • EU May HICP Final YY, 1.2%, 1.2% f'cast, 1.2% prev
     
  • EU Apr Eurostat Trade NSA (EUR), 15.7 bln, 22.5 bln prev
     
  • Germany Jun ZEW Economic Sentiment, -21.1, -5.9 f'cast, -2.1 prev
     
  • Germany Jun ZEW Current Conditions, 7.8, 6.0 f'cast, 6.0 prev
     
  • Ifo cuts 2020 German growth forecast as industry recession broadens
     
  • In battleground state of Florida, Trump to launch re-election campaign
     
  • Italy's Tria says Rome will spend less, can avoid EU action on deficit
     
  • Johnson gets further boost in race to become British prime minister
     
  • Iran says it won't wage war, U.S. deploys more troops to Middle East
     
  • Hong Kong leader signals end to extradition bill but refuses to quit
     

Economic Data Ahead

  • (0830 ET/1230 GMT) The U.S. Department of Commerce is expected to report that housing starts increased to an annualized rate of 1.240 million units in May from 1.235 million units in April.
     
  • (0830 ET/1230 GMT) The U.S. building permits are likely to have increased to a 1.296 million-unit pace in May from a 1.290 million-unit pace in the previous month.
     
  • (0830 ET/1230 GMT) Statistics Canada releases manufacturing shipments data for the month of April. Manufacturing sales are likely to have increased 0.5 percent after rising 2.1 percent in March.
     
  • (1630 ET/2030 GMT) API reports its weekly crude oil stock.
     

Key Events Ahead

  • N/A The U.S. Federal Open Market Committee begins a two-day meeting on interest rate policy.
     
  • (0930 ET/1330 GMT) Powertalk with Bundesbank executive board member Joachim Wuermeling, title: "Connecting Values: A Digital Finance Hub for Europe" in Frankfurt
     
  • (1000 ET/1400 GMT) Bank of England Governor Mark Carney gives a speech.
     
  • (1000 ET/1400 GMT) European Central Bank President Mario Draghi participates in policy panel in Sintra, Portugal
     
  • (1000 ET/1400 GMT) European Central Bank Executive Board member Philip Richard Lane gives a speech
     

FX Beat

DXY: The dollar index rallied ahead of the widely anticipated U.S. Federal Reserve policy decision, where Federal Reserve Chairman Jerome Powell will likely lay the groundwork for a rate cut later this year.  The greenback against a basket of currencies traded 0.2 percent down at 97.68, having touched a high of 97.75, its highest since June 3. FxWirePro's Hourly Dollar Strength Index stood at 96.12 (Slightly Bullish) by 1000 GMT.

EUR/USD: The euro plunged to a fresh 2-week low after data showed inflation in the euro zone slowed to 1.2 percent in May, the lowest rate in more than a year, as price growth in the energy and services sectors slackened. Moreover, European Central Bank President Mario Draghi comments, citing that policymakers will provide more stimulus if inflation does not pick up intensified the selling pressure around the major. The European currency traded 0.2 percent down at 1.1194, having touched a low of 1.1181 earlier, its lowest since June 3. FxWirePro's Hourly Euro Strength Index stood at -134.07 (Highly Bearish) by 1000 GMT. Immediate resistance is located at 1.1258 (32.2% retracement of 1.1347 and 1.1202), a break above targets 1.1292 (61.8% retracement). 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 slumped after rising for two straight sessions, as investors remained cautious ahead of the Federal Reserve’s interest rate meeting. Moreover, concern over the protracted trade war between the United States and China further supported the bid tone around the Japanese yen. The pair was trading 0.2 percent down at 108.30, having hit a high of 108.72 the day before, its highest since June 11. FxWirePro's Hourly Yen Strength Index stood at 115.13 (Highly Bullish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. building permits and housing starts. Immediate resistance is located at 108.80 (June 11 High), a break above targets 109.08 (Jan. 8 High). 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 a 5-1/2 month low as investors worried about the risks of a hard exit from the European Union on signs that arch-Brexiteer Boris Johnson may be a step closer to becoming Britain's next prime minister. The major traded 0.1 percent down at 1.2526, having hit a low of 1.2511 earlier; it’s lowest since Jan 3. FxWirePro's Hourly Sterling Strength Index stood at -90.68 (Slightly Bearish) 1000 GMT. Immediate resistance is located at 1.2570 (23.6% retracement of 1.2758 and 1.12511), a break above could take it near 1.2635 (50% retracement). On the downside, support is seen at 1.2476 (Dec. 12 Low), a break below targets 1.2435. Against the euro, the pound was trading 0.2 percent up at 89.33 pence, having hit a low of 89.74 earlier, it’s lowest since Jan. 15.

USD/CHF: The Swiss franc declined to a 2-week trough as the greenback surged on expectations that the U.S. central bank will leave borrowing costs unchanged at a two-day policy meeting starting today.  The major trades 0.05 percent up at 0.9994, having touched a high of 1.0005 earlier; it’s highest since June 3. FxWirePro's Hourly Swiss Franc Strength Index stood at -97.16 (Slightly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 1.0042 (May 24 High) and any break above will take the pair to next level till 1.0098 (May 30 High). The near-term support is around 0.9925 (Jan. 14 Low), and any close below that level will drag it till 0.9879 (June 6 Low).

Equities Recap

European shares reversed early session losses after European Central Bank chief Mario Draghi promised more monetary stimulus if the economy did not improve.

The pan-European STOXX 600 index surged 0.8 percent at 381.37 points, while the FTSEurofirst 300 gained 0.8 percent to 1,502.31 points.

Britain's FTSE 100 trades 0.5 percent up at 7,396.71 points, while mid-cap FTSE 250 rallied 0.4 to 19,165.37 points.

Germany's DAX rose 0.8 percent at 12,179.89 points; France's CAC 40 trades 1.1 percent higher at 5,449.60 points.

Commodities Recap

Crude oil prices declined for a second straight session on signs that global economic growth is being hit by the U.S.-China trade war, although Middle East tensions after last week's tanker attacks capped losses. International benchmark Brent crude was trading 0.9 percent lower at $60.37 per barrel by 1019 GMT, having hit a low of $59.55 on Wednesday, its lowest since June 5. U.S. West Texas Intermediate was trading 0.7 percent down at $51.55 a barrel, after falling as low as $50.71 on Wednesday, its lowest since the June 5.

Gold prices rallied as investors remained cautious ahead of the U.S. Federal Reserve's two-day monetary policy meeting. Spot gold gained 0.5 percent to $1,345.65 per ounce by 1021 GMT, having touched a high of $1,358.06 on Friday, its highest since April 11. U.S. gold futures climbed 0.5 percent to $1,349.80 an ounce.

Treasuries Recap

The U.S. Treasuries jumped during the afternoon session, ahead of the Federal Reserve’s monetary policy meeting on June 19 at 18:00GMT. The yield on the benchmark 10-year Treasury yield slumped 4 basis points to 2.048 percent, the super-long 30-year bond yields also plunged 4 basis points to 2.539 percent and the yield on the short-term 2-year traded 3 basis points lower at 1.836 percent.

The German bund yields plunged during European trading session following a dovish speech from European Central Bank (ECB) President Mario Draghi, delivered early today, along with a fall in eurozone’s consumer price inflation (CPI) for the month of May. The German 10-year bond yields, which move inversely to its price, plummeted 5-1/2 basis points to -0.303 percent, the yield on 30-year note plunged nearly 7-1/2 basis points to 0.271 percent and the yield on short-term 2-year slumped nearly 5 basis to -0.732 percent.

The Japanese government bonds gained at close as investors wait to watch the country’s trade balance data for the month of May, scheduled to be released today by 23:50GMT and the Bank of Japan’s (BoJ) monetary policy meeting, due to be concluded on June 20, which shall provide further direction to the debt market. At close, the yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 3 basis points to -0.127 percent, the yield on the long-term 30-year slightly edged 1 basis point lower to 0.361 percent and the yield on short-term 2-year remained flat at -0.196 percent.

The Australian government bond yields slumped during early Asian session of the second trading day of the week after the Reserve Bank of Australia’s (RBA) June monetary policy meeting minutes hinted at more likely rate cuts in further monetary policies, besides, possible extension of the significant slack in the labour market. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 2-1/2 basis points to 1.368 percent, the yield on the long-term 30-year bond plunged 3 basis points to 1.990 percent and the yield on short-term 2-year traded 2 basis points lower at 1.014 percent.

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July 2 15:00 UTC Released

DKCurrency Reserves

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449.6 Stale

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451.7 Stale

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USISM NY Biz Conditions

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50 %

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48.6 %

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2016 bln ARS

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January 22 19:00 UTC 777805777805m

ARTrade Balance

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-1541 %

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2016 bln ARS

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-1541 %

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2016 bln ARS

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January 31 00:00 UTC 765985765985m

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2016 bln ARS

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2016 bln ARS

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