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Europe Roundup: Sterling consolidates as investor eye Brexit warnings, euro eases on downbeat EZ credit data, markets await Fed Chair Powell's speech - Wednesday, November 28th, 2018 

Market Roundup

  • Eurozone Oct 2018 broad money increase to 12271797 EUR vs previous 12198222 eur
     
  • Italy Oct 2018 producer prices yy increase to 5.8 % vs previous 4.7 %
     
  • Italy Oct 2018 producer prices mm increase to 1.3 % vs previous 0.4 %
     
  • Eurozone Oct 2018 loans to non-fin decrease to 3.9 % vs previous 4.3 %
     
  • Eurozone Oct 2018 loans to households increase to 3.2 % vs previous 3.1 %
     
  • Eurozone Oct 2018 Money-M3 annual growth increase to 3.9 % (forecast 3.5 %) vs previous 3.5 %
     
  • Switzerland Nov 2018 investor sentiment decrease to -42.3 balance vs previous -39.1 balance
     
  • Germany Dec 2018 GFK consumer sentiment decrease to 10.4 balance (forecast 10.5 balance) vs previous 10.6 balance
     

Economic Data Ahead

  • (0830 ET/1330 GMT) The U.S. Commerce Department is expected to report that preliminary gross domestic product increased at a 3.5 percent annual rate in the third quarter.
     
  • (0830 ET/1330 GMT) The U.S. Commerce Department releases the preliminary personal consumption expenditures (PCE) price index for the third quarter. The index is expected to rise 1.6 percent, while core PCE is also likely to increase 1.6 percent.
     
  • (0830 ET/1330 GMT) The U.S. Census Bureau is likely to report that preliminary wholesale inventories rose 0.5 percent in October after posting a gain of 0.4 percent in September.
     
  • (0830 ET/1330 GMT) The United States releases goods trade balance data for the month of October. The economy recorded a trade deficit of $76.04 billion in the previous month.
     
  • (1000 ET/1500 GMT) The U.S. new home sales are expected to have surged 3.7 percent to a seasonally adjusted annual rate of 575,000 units in October. New home sales dropped 5.5 percent in September to a seasonally adjusted annual rate of 553,000 units.
     
  • (1000 ET/1500 GMT) Federal Reserve Bank of Richmond will publish it Manufacturing Index for November. The index posted a rise of 15 in the prior month.
     
  • (1100 ET/1600 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending November 23.
     

Key Events Ahead

  • (0705 ET/1205 GMT) Opening remarks by ECB board member Benoit Coeure at the Foreign Exchange Contact Group meeting in Frankfurt, Germany
     
  • (0800 ET/1300 GMT) ECB Vice President Luis de Guindos gives Opening remarks at conference in Luxembourg
     
  • (0930 ET/1430 GMT) Fed holds technical background teleconference to discuss release of the Financial Stability Report, in Washington
     
  • (1020 ET/1520 GMT) ECB board member Peter Praet chairing panel session II on "Investment finance in Europe – a system fit for growth?" in Luxembourg
     
  • (1145 ET/1645 GMT) Bank of England Governor Mark Carney gives a speech
     
  • (1200 ET/1700 GMT) Federal Reserve Chairman Jerome Powell speaks on "The Federal Reserve's Framework for Monitoring Financial Stability" in New York
     

FX Beat

DXY: The dollar index consolidated near a 2-week peak as investors focused on whether Fed Chairman Jerome Powell will address the growing hostility from Trump and also indications as to how quickly a rate pause might come. The greenback against a basket of currencies trades 0.05 percent up at 97.36, having touched a high of 97.53 earlier, its highest since Nov 13. FxWirePro's Hourly Dollar Strength Index stood at 101.24 (Highly Bullish) by 1000 GMT.

EUR/USD: The euro rebounded after falling to a fresh 2-week low on European Central Bank's data that showed corporate lending growth slowed in the eurozone last month, adding to signs that a worsening economic outlook is starting to take its hit on credit. The European currency traded 0.05 percent up at 1.1288, having touched a low of 1.1267, its lowest since Nov. 14. FxWirePro's Hourly Euro Strength Index stood at -62.69 (Bearish) by 1000 GMT. Immediate resistance is located at 1.1330 (November 12 High), a break above targets 1.1387 (October 30 High). On the downside, support is seen at 1.1263 (November 14 Low)., a break below could drag it till 1.1216 (November 13 Low).

USD/JPY: The dollar rallied to a 2-week peak after Federal Reserve Vice Chair Richard Clarida reaffirmed the need for a further increase in interest rates. Investors now await Fed Chairman Jerome Powell's speech later in the day for insights into the central bank's plans for monetary tightening and its reaction to recent criticism by U.S. President Donald Trump. The major was trading 0.05 percent up at 113.80, having hit a high of 113.90, its highest since November 14. FxWirePro's Hourly Yen Strength Index stood at 45.64 (Neutral) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. preliminary gross domestic product index, wholesale inventories, goods trade balance, personal consumption expenditures, new home sales and speech from Fed Chair Powell. Immediate resistance is located at 114.14 (November 13 High), a break above targets 114.60. On the downside, support is seen at 113.29 (November 14 Low), a break below could take it lower 112.64 (November 16 Low).

GBP/USD: Sterling bounced back after falling to a 2-week trough in the previous session, as investors await the warnings from the British government and the Bank of England on how much damage a no-deal Brexit would do to the economy. The major traded 0.4 percent up at 1.2746, having hit a low of 1.2725 on Tuesday; it’s lowest since November 15. FxWirePro's Hourly Sterling Strength Index stood at -64.25 (Bearish) 1000 GMT. Immediate resistance is located at 1.2819 (November 21 High), a break above could take it near 1.2884 (November 19 High). On the downside, support is seen at 1.2723 (November 14 Low), a break below targets 1.2698 (October 31 Low). Against the euro, the pound was trading 0.4 percent up at 88.26 pence, having hit a high of 88.25 earlier, it’s highest since Nov. 15.

USD/CHF: The Swiss franc continued to consolidate near a 2-week low, as the greenback surged ahead of Fed Chairman Jerome Powell's speech later on Wednesday that could provide cues on U.S. rates hikes in 2019. The major trades 0.05 percent up at 0.9986, having touched a high of 1.0003 on Tuesday; it’s highest since Nov. 19. FxWirePro's Hourly Swiss Franc Strength Index stood at -24.20 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 1.0026 (Oct. 26 High) and any break above will take the pair to next level till 1.0050 (Nov. 7 High). The near-term support is around 0.9952 (October 26 Low), and any close below that level will drag it till 0.9897 (October 17 Low).

Equities Recap

European shares bounced back as the trade war fears eased on the prospect of a meeting between the U.S. and Chinese presidents at a G20 meeting in Argentina.

The pan-European STOXX 600 index surged 0.1 percent at 357.81 points, while the FTSEurofirst 300 index rallied 0.1 percent to 1,410.00 points.

Britain's FTSE 100 trades 0.1 percent down at 7,012.22 points, while mid-cap FTSE 250 declined 0.05 percent to 18,654.43 points.

Germany's DAX rose 0.1 percent at 11,317.06 points; France's CAC 40 trades 0.3 percent higher at 4,997.62 points.

Commodities Recap

Crude oil declined, halting a two-day winning streak, despite expectations that OPEC and its partners will next week decide to curb supply. International benchmark Brent crude was trading 0.7 percent down at $60.37 per barrel by 0958 GMT, having hit a low of $58.42 on Friday, its lowest since October 2017. U.S. West Texas Intermediate was trading 0.3 percent up at $52.24 a barrel, after falling as low as $50.14 on Monday, its lowest since the October 2017.

Gold prices declined, weighed down by a robust dollar after a senior U.S. Federal Reserve official reaffirmed the need for a further increase in interest rates. Spot gold was trading 0.1 percent down at $1,213.18 per ounce at 1029 GMT, having eased to its lowest level since Nov. 15 at $1,211.82 on Tuesday. U.S. gold futures were down about 0.1 percent at $1,214.

Treasuries Recap

The U.S. Treasuries traded flat during late afternoon session amid a muted trading session that witnessed data of little economic significance. The yield on the benchmark 10-year Treasuries remained flat at 3.057 percent, the super-long 30-year bond yields slipped 1 basis point to 3.311 percent and the yield on the short-term 2-year hovered around 2.835 percent.

The United Kingdom’s gilts remained mixed during the afternoon session amid dominance of Brexit news-flow in the country, with the Treasury and BoE both set to publish assessments of the draft EU-UK Brexit deal. The yield on the benchmark 10-year gilts, slumped 2-1/2 basis points to 1.369 percent, the super-long 30-year bond yields jumped 2-1/2 basis points to 2.014 percent and the yield on the short-term 2-year traded nearly 2 basis points lower at 0.758 percent.

The German bunds rallied during European session ahead of the European Central Bank’s (ECB) President Mario Draghi’s speech, scheduled to be held on November 29 by 14:00GMT, followed by the country’s unemployment change for the month of November, scheduled to be released on the same day by 08:55GMT for further direction in the debt market. The German 10-year bond yields, which move inversely to its price, fell nearly 1-1/2 basis points to 0.335 percent, the yield on 30-year note also slipped 1-1/2 basis points to 1.003 percent and the yield on short-term 2-year traded steady at -0.651 percent.

 The Japanese government bonds crawled downside ahead of the country’s retail sales and industrial production data for the month of October, scheduled to be released on today and 29 respectively by 23:50GMT. The yield on the benchmark 10-year JGB note, which moves inversely to its price, jumped to 0.099 percent, the yield on the long-term 30-year note remained tad higher at 0.813 percent while the yield on short-term 2-year fell to -0.134 percent, from yesterday’s 0.139 percent.

The Australian government bonds remained tad higher during Asian session as investors’ risk appetite showed downward signs, tracking a similar movement in the United States’ Treasuries. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped 1/2 basis point to 2.627 percent, the yield on the long-term 30-year bond fell nearly 1 basis point to 3.150 percent and the yield on short-term 2-year traded nearly steady at 2.032 percent.

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449.6 Stale

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