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Europe Roundup: Sterling eases amid Brexit concerns; Swiss franc, yen gains on rising geopolitical tensions, European shares surge - Thursday, June 13th, 2019

Market Roundup

  • EUR/USD 0.02%, USD/JPY -0.04%, GBP/USD -0.09%, EUR/GBP 0.17%
  • DXY -0.03%, DAX 0.51%, FTSE 0.22%, Brent 3.15%, Gold 0.24%
  • Oil prices surge after suspected tanker attack near Iran
  • Race to replace British PM to narrow as Conservative
    lawmakers vote in first round
  • Chinese vice premier urges more support for economy as trade war bites
  • China says won't yield to any U.S. pressure over trade
  • EU Apr Industrial Production MM, -0.5%, -0.5% f'cast, -0.3% prev 0.0% rvsd
  • EU Apr Industrial Production YY, -0.4%, -0.5% f'cast, -0.6% prev 0.0% rvsd
  • Germany May CPI Final MM, 0.2%, 0.2% f'cast, 0.2% prev
  • Germany May CPI Final YY, 1.4%, 1.4% f'cast, 1.4% prev
  • Germany May HICP Final MM, 0.3%, 0.3% f'cast, 0.3% prev
  • Germany May HICP Final YY, 1.3%, 1.3% f'cast, 1.3% prev
  • German economic outlook muted for Q2, predicts ministry
  • SNB says U.S.-China trade war triggering franc's rise
  • U.S. politics gives euro's global use a boost - ECB

Economic Data Ahead

  • (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 2,000 to a seasonally adjusted 216,000 for the week ended Jun. 7, while continuing claims for the week ended May 31 is expected to decline to 1.680 million from a previous reading of 1.682 million.
  • (0830 ET/1230 GMT) The U.S. Labor Department publishes import and export prices index for the month of May. The import prices are likely to have declined 0.2 percent after rising 0.2 percent in April, while exports are expected to have edged down 0.1 percent after increasing 0.2 percent in the prior month.
  • (0830 ET/1230 GMT) Statistics Canada releases its New Housing Price Index (NHPI) for the month of April. The index remained unchanged in the previous month.
  • (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending February 3.

Key Events Ahead

  • (0800 ET/1200 GMT) BoE's Alex Brazier speaks at University of Warwick in London

FX Beat

DXY: The dollar index consolidated within narrow ranges, following a sharp decline in long-term U.S. Treasury yields. The greenback against a basket of currencies traded flat at 96.99, having touched a low of 96.46 on Friday, its lowest since Mar. 25. FxWirePro's Hourly Dollar Strength Index stood at 107.20 (Highly Bullish) by 1000 GMT.

EUR/USD: The euro trimmed gains after Germany's Economy Ministry stated that the German outlook is subdued for the second quarter due to headwinds from global trade conflicts. The European currency traded flat at 1.1287, having touched a high of 1.1347 on Friday, its highest since Mar. 22. FxWirePro's Hourly Euro Strength Index stood at -12.41 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1359 (Mar. 18 High), a break above targets 1.1402 (Feb. 16 High). On the downside, support is seen at 1.1263 (Mar. 26 Low), a break below could drag it below 1.1201 (May 14 Low).

USD/JPY: The dollar eased, extending previous session losses, weighed down by fading hopes of a U.S.-China trade deal at this month's G20 meeting and expectations of an interest rate cut by the Federal Reserve. The pair was trading down at 108.47, having hit a high of 108.80 on Tuesday, its highest since May 31. FxWirePro's Hourly Yen Strength Index stood at 98.37 (Slightly Bearish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims, and import and export price index. 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 declined as uncertainty over Brexit and growing concern about a leadership contest in Britain that may lead to a disorderly departure from the European Union dented the bid tone around the British pound. The major traded 0.1 percent down at 1.2676, having hit a high of 1.2763 on Friday; it’s highest since May 21. FxWirePro's Hourly Sterling Strength Index stood at -75.47 (Slightly Bearish) 1000 GMT. Immediate resistance is located at 1.2763 (June 7 High), a break above could take it near 1.2798 (May 17 High). On the downside, support is seen at 1.2647 (May 24 Low), a break below targets 1.2580 (May 30 Low). Against the euro, the pound was trading 0.1 percent down at 89.04 pence, having hit a low of 89.32 on Tuesday, it’s lowest since Jan. 15.

USD/CHF: The Swiss franc gained, halting a 3-day losing day, as suspected attacks on two tankers off the coast of Iran added to the already-heightened tensions between Iran and the United States. The major trades 0.2 percent down at 0.9931, having touched a high of 0.9960 earlier; it’s highest since Jun. 6. FxWirePro's Hourly Swiss Franc Strength Index stood at 99.58 (Slightly 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 0.9859 (June 7 Low), and any close below that level will drag it till 0.9820 (Dec. 20 Low).

Equities Recap

European shares advanced, boosted by a surge in telecom stocks, while oil prices rallied following suspected attacks on two tankers off the coast of Iran.

The pan-European STOXX 600 index rallied 0.2 percent at 380.67 points, while the FTSEurofirst 300 surged 0.2 percent to 1,497.61 points.

Britain's FTSE 100 trades 0.2 percent up at 7,384.67 points, while mid-cap FTSE 250 declined 0.3 to 19,194.66 points.

Germany's DAX rose 0.5 percent at 12,171.20 points; France's CAC 40 trades 0.1 percent higher at 5,380.16 points

Commodities Recap

Crude oil prices advanced as much as 4 percent after a suspected attack on two tankers in the Gulf of Oman near Iran and the Strait of Hormuz, through which a fifth of global oil consumption passes. International benchmark Brent crude was trading 3.6 percent higher at $61.86 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 3.2 percent up at $52.60 a barrel, after falling as low as $50.71 on Wednesday, its lowest since the June 5.

Gold prices surged as demand for the safe-haven assets rose on expectations of an interest rate cut by the U.S. Federal Reserve following soft inflation data, and on escalating trade tensions between U.S. and China. Spot gold was 0.3 percent up at $1,336.54 per ounce by 1025 GMT, having touched a low of $1,319.79 on Monday, its lowest since June 3. U.S. gold futures were also 0.3 percent higher, at $1,341.40 an ounce.

Treasuries Recap

The U.S. Treasuries continued to gain during the afternoon session, ahead of the country’s weekly initial jobless claims, scheduled to be released today by 12:30GMT, and the super-long 30-year Note auction, also due later today by 17:00GMT. The yield on the benchmark 10-year Treasury yield suffered nearly 1-1/2 basis points to 2.115 percent, the super-long 30-year bond yields slipped 1 basis point to 2.615 percent and the yield on the short-term 2-year slumped nearly 2-1/2 basis points to 1.866 percent.

The German bunds traded tad higher during European trading session after the country’s consumer price inflation (CPI) for the month of May rose, although the extent of gain remained steady when compared to that in April. The German 10-year bond yields, which move inversely to its price, hovered around -0.241 percent, the yield on 30-year note traded nearly 1-1/2 basis points lower at 0.364 percent and the yield on short-term 2-year remained flat at -0.669 percent.

The Japanese government bonds ended steady amid a silent Asian trading session that witnessed data of little economic significance as investors wait to watch the country’s industrial production data for the month of April, scheduled to be released on June 13 by 04:30GMT for further direction in the debt market. At close, the yield on the benchmark 10-year JGB note, which moves inversely to its price, hovered around -0.113 percent, the yield on the long-term 30-year slightly slipped to 0.343 percent and the yield on short-term 2-year remained nearly stable at -0.197 percent.

The Australian government bonds gained during early Asian session tracking a similar movement in the United States Treasuries after a weaker-than-expected growth in the latter country’s consumer price inflation (CPI) for the month of May, released late yesterday. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 3 basis points to 1.409 percent, the yield on the long-term 30-year bond also slumped nearly 3 basis points to 2.048 percent and the yield on short-term 2-year plummeted nearly 4 basis points to 1.018 percent.

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July 2 15:00 UTC Released

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Actual

449.6 Stale

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451.7 Stale

July 2 13:45 UTC Released

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