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Europe Roundup: Sterling consolidates on rate cut concerns, Swiss franc at 2-week low as Mideast tensions fade, investors eye U.S. nonfarm payroll report - Friday, January 10th, 2020

Market Roundup

  • Gold eases amid rising equities
     
  • Oil slips towards $65 amid easing Mideast worries
     

Economic Data Ahead

  • (0830 ET/1330 GMT) US Nonfarm Payrolls (Dec)
     
  • (0830 ET/1330 GMT) US Unemployment Rate (Dec)
     
  • (0830 ET/1330 GMT) Canada Unemployment Rate (Dec)
     
  • (1000 ET/1500 GMT) US Wholesale Inventories (Nov)
     

Key Events Ahead

  • No significant events scheduled

FX Beat

DXY: The dollar index surged as investors await U.S. December non-farm payrolls data that could help to determine the economic expansion of the economy. The greenback against a basket of currencies traded 0.1 percent up at 97.51, having touched a high of 97.58 earlier, its highest since Dec. 26.

EUR/USD: The euro plunged to a 2-week low as the greenback surged ahead of U.S. employment data. The European currency traded 0.2 percent down at 1.1088, having touched a low of 1.1085 earlier, its lowest since December 26. Immediate resistance is located at 1.1134 (21-DMA), a break above targets 1.1158 (10-DMA). On the downside, support is seen at 1.1082, a break below could drag it below 1.1062.

USD/JPY: The dollar rallied to a 2-week peak, supported by easing Middle East tensions and upbeat U.S. economic data, while investors awaited crucial jobs figures due later in the day. The U.S. non-farm payrolls report is expected to show 164,000 jobs were added in December compared with an increase of 266,000 in November. The major was trading 0.1 percent up at 109.63, having hit a high of 109.65 earlier, its highest since Dec. 27. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. nonfarm payroll report, unemployment rate and wholesale inventories. Immediate resistance is located at 109.70, a break above targets 109.92. On the downside, support is seen at 109.32, a break below could take it near at 109.08 (21-DMA).

GBP/USD: Sterling continued to consolidate below the 1.3100 handle after Bank of England Governor Mark Carney signalled a possible rate cut a day earlier. The major traded flat at 1.3069, having hit a low of 1.3012 on Thursday, it’s lowest since Dec. 27. Investors’ attention will remain on the development surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3130, a break above could take it near 1.3181. On the downside, support is seen at 1.3032, a break below targets 1.3000. Against the euro, the pound was trading up at 84.86 pence, having hit a high of 84.54 on Wednesday, it’s highest since Dec. 17.

USD/CHF: The Swiss franc slumped to a 2-week low as fears of conflict in the Middle East eased and investors re-focused on the Phase 1 trade deal between the United States and China. The major trades 0.3 percent up at 0.9755, having touched a high of 0.9762 earlier, it’s highest since December 30. On the higher side, near-term resistance is around 0.9787 and any break above will take the pair to the next level till 0.9818. The near-term support is around 0.9688, and any close below that level will drag it till 0.9646.

Equities Recap

European shares rallied as relief over de-escalation in U.S-Iran military tensions boosted investor sentiment.

The pan-European STOXX 600 index surged 0.1 percent at 420.09 points, while the FTSEurofirst 300 rallied 0.1 percent to 1,642.92 points.

Britain's FTSE 100 trades 0.05 percent up at 7,601.57 points, while mid-cap FTSE 250 declined 0.1 to 21,620.87 points.

Germany's DAX rose 0.2 percent at 13,527.49 points; France's CAC 40 trades 0.05 percent higher at 6,045.12 points.

Commodities Recap

Crude oil declined, extending losses for the fifth straight session as the threat of war in the Middle East receded and investors focused on rising U.S. inventories and other signs of ample supply. International benchmark Brent crude was trading 0.2 percent lower at $65.24 per barrel by 1058 GMT, having hit a high of $71.31 on Wednesday, its highest since May 22. U.S. West Texas Intermediate was trading 0.3 percent down at $59.37 a barrel, after rising as high as $65.62 on Wednesday, its highest since April 25.

Gold prices declined as easing tensions in the Middle East prompted investors to move back to riskier assets. Spot gold fell 0.1 percent to $1,548.61 per ounce by 1101 GMT, having touched a high of $1611.27 on Wednesday, its highest since March 2013. U.S. gold futures eased 0.2 percent to $1,551.60.

Treasuries Recap

The U.S. Treasuries continued to remain flat during the afternoon session ahead of the country’s non-farm payrolls data for the month of December, scheduled to be delivered today by 13:30GMT and the employment data for the similar period, also due for later today. The yield on the benchmark 10-year Treasury yield remained flat at 1.855 percent, the super-long 30-year bond yield fell nearly 1 basis point to 2.322 percent and the yield on the short-term 2-year hovered around 1.586 percent.

The German bunds gained during European trading session as investors shifted base to safe-haven assets following Israel’s airstrike on Syria-based Iranian military near the Iraqi border, according to news released by the Syrian Observatory for Human rights. The German 10-year bond yield, which move inversely to its price, slipped 1/2 basis point to -0.226 percent, the yield on 30-year note also edged tad down to 0.321 percent and the yield on short-term 2-year suffered nearly 1 basis point to -0.599 percent.

The Australian bonds slumped during Asian session of the last trading day of the week after the country’s retail sales for the month of November topped market expectations, rising from the prior reading in October as well amid an otherwise muted trading session that witnessed data of little economic significance. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, hovered around 1.242 percent, the yield on the long-term 30-year bond slipped 1/2 basis point to 1.858 percent and the yield on short-term 2-year gained nearly 1 basis point to 0.808 percent.

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