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Europe Roundup: Sterling eases as PM May battles to rescue Brexit deal, euro at 2-week peak as EU trade surplus with U.S. widens, European shares surge - Monday, March 18th, 2019

Market Roundup

  • EUR/USD 0.19%, USD/JPY -0.01%, GBP/USD 0.23%, EUR/GBP 0.43%
     
  • DXY -0.15%, DAX 0.01%, FTSE 0.75%, Brent -0.33%, Gold 0.32%
     
  • UK government hopes to go ahead with Brexit vote on Tuesday if numbers there – Hunt
     
  • Sterling falls as lawmakers cast doubt on PM May's Brexit deal
     
  • EU trade surplus with U.S. expands, deficit with China grows
     
  • Britons turn more cautious about big spending as Brexit nears-IHS Markit
     
  • China rejects "abnormal" U.S. spying concerns as EU pushes trade
     
  • "Grey rhino" risks in China's financial sector rising - c.bank official
     
  • OPEC to scrap April meeting but keep oil cuts in place
     

Economic Data Ahead

  • (0830 ET/1330 GMT) Statistics Canada will report foreign portfolio investment in domestic stocks for the month of December.
     
  • (0830 ET/1330 GMT) Statistics Canada will release investment in foreign securities figures for the month of December.
     
  • (1000 ET/1500 GMT) The National Association of Home Builders (NAHB) is expected to report that the U.S. Housing Market Index rose to 63 in March, up from 62 in February.
     

Key Events Ahead

  • (0915 ET/1315 GMT) ECB Board Member Luis de Guindos speaks at the Asociación para el Progreso de la Dirección in Madrid
     
  • (1110 ET/1510 GMT) ECB's chief economist Peter Praet speaks in Luxembourg
     

FX Beat

DXY: The dollar index plunged to a 2-week low as weaker-than-expected manufacturing data supported expectations the Fed will strike a dovish tone when it meets this week. The greenback against a basket of currencies traded 0.1 percent down at 96.40, having touched a low of 96.39, its lowest since March 4. FxWirePro's Hourly Dollar Strength Index stood at -96.64 (Slightly Bearish) by 1000 GMT.

EUR/USD: The euro rose to a 2-week peak after data showed the European Union's goods trade surplus with the United States expanded to 11.5 billion euros ($13.0 billion) in January, from 10.1 billion in January 2018. The European currency traded 0.3 percent up at 1.1356, having touched a high of 1.1352, its highest since Mar. 4. FxWirePro's Hourly Euro Strength Index stood at 70.65 (Bullish) by 1000 GMT. Immediate resistance is located at 1.1367 (78.6% retracement of 1.1176 and 1.1496), a break above targets 1.1408 (March 1 High). On the downside, support is seen at 1.1297 (5-DMA), a break below could drag it till 1.1243 (Mar. 12 Low).

USD/JPY: The dollar trimmed gains, as caution about the U.S. economy and expectations for an accommodative Federal Reserve meeting this week dented the bid tone around the greenback. The major was trading flat at 111.47, having hit a high of 111.90 on Friday, its highest since March 6. FxWirePro's Hourly Yen Strength Index stood at -1.64 (Slightly Bearish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of U.S. NAHB housing market index. Immediate resistance is located at 112.13 (Mar. 5 High), a break above targets 112.60 (Dec. 20 High). On the downside, support is seen at 111.11 (Mar. 12 Low), a break below could take it lower at 110.66 (Feb.28 Low).

GBP/USD: Sterling declined as some British lawmakers cast doubt on Prime Minister Theresa May's chances of winning a third attempt at securing parliamentary approval for her Brexit withdrawal deal. The major traded 0.2 percent down at 1.3256, having hit a high of 1.3380 on Wednesday; it’s highest since June 14. FxWirePro's Hourly Sterling Strength Index stood at 109.10 (Highly Bullish) 0500 GMT. Immediate resistance is located at 1.3380 (Mar. 13 High), a break above could take it near 1.3446 (June 14 High). On the downside, support is seen at 1.3202 (Mar. 15 Low), a break below targets 1.3166 (Mar. 4 Low). Against the euro, the pound was trading 0.2 percent down at 85.30 pence, having hit a high of 84.71 on Wednesday, it’s highest since May 2017.

USD/CHF: The Swiss franc rallied to a near 2-week peak as investors turned cautious amid signs of global economic growth slowdown. The major trades 0.2 percent down at 1.0001, having touched a low of 1.0001; it’s lowest since March 5. FxWirePro's Hourly Swiss Franc Strength Index stood at 77.80 (Bullish) by 1000 GMT. On the higher side, near-term resistance is around 1.0056 (5-DMA) and any break above will take the pair to next level till 1.0124 (Mar. 7 High). The near-term support is around 0.9983 (February 25 Low), and any close below that level will drag it till 0.9962 (February 27 Low).

Equities Recap

European shares rallied as markets priced in an accommodative stance from the U.S. Federal Reserve at its policy meeting this week.

The pan-European STOXX 600 index surged 0.2 percent at 381.92 points, while the FTSEurofirst 300 index rallied 0.1 percent to 1,500.54 points.

Britain's FTSE 100 trades 0.7 percent up at 7,275.32 points, while mid-cap FTSE 250 declined 0.1 to 19,469.46 points.

Germany's DAX fell 0.2 percent at 11,666.25 points; France's CAC 40 trades 0.1 percent higher at 5,408.61 points.

Commodities Recap

Crude oil prices eased, weighed by concerns that an economic downturn may dent fuel consumption, however, supply cuts led by producer group OPEC and U.S. sanctions against Iran and Venezuela capped downside. International benchmark Brent crude was trading 0.1 percent down at $66.92 per barrel by 1036 GMT, having hit a high of $68.11 on Thursday, its highest since Nov. 16. U.S. West Texas Intermediate was trading 0.3 percent lower at $58.20 a barrel, after rising as high as $58.93 on Friday, its highest since the Nov. 13.

Gold prices surged, extending gains for the second straight session, as the dollar eased after soft U.S. data increased chances the Federal Reserve will signal a dovish policy stance at its meeting this week. Spot gold rose 0.2 percent to $1,304.86 per ounce by 1038 GMT, having touched a high of $1,311.18 on Wednesday, its highest since March 1. U.S. gold futures gained 0.1 percent to $1,303.80.

Treasuries Recap

The U.S. Treasuries remained tad higher during afternoon session amid a quiet trading session that witnessed data of little economic significance ahead of the upcoming Fed monetary policy meeting later this week. The yield on the benchmark 10-year Treasury yield traded flat at 2.592 percent, the super-long 30-year bond yields hovered around 3.019 percent and the yield on the short-term 2-year traded tad lower at 2.438 percent.

The German bunds gained during European session ahead of the country’s ZEW economic sentiment index for the month of March, scheduled to be released on March 19 by 10:00GMT, besides, the European Union leaders’ summit, due to be held on March 21, which shall provide further direction to the debt market. The German 10-year bond yields, which move inversely to its price, slipped 1 basis point to 0.082 percent, the yield on 30-year note remained tad lower at 0.744 percent and the yield on short-term 2-year hovered around -0.532 percent.

The Japanese government bonds traded higher at the end of Asian session after the Bank of Japan (BoJ) in its 2-day monetary policy meeting, concluded early today, cut its economic assessment, while maintaining monetary policy on hold, in line with market participants had anticipated. The yield on the benchmark 10-year JGB note, which moves inversely to its price, fell slightly to -0.040 percent, the yield on the long-term 30-year hovered around 0.570 percent and the yield on short-term 2-year edged 1 basis point lower to -0.158 percent.

The Australian government bonds remained flat during Asian trading session amid a muted day that witnessed data of little economic significance as investors wait to watch the Reserve Bank of Australia’s (RBA) March monetary policy meeting minutes, scheduled to be released on March 19 by 00:30GMT which shall provide further direction to the debt market. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, traded flat at 1.980 percent, the yield on the long-term 30-year bond hovered around 2.610 percent and the yield on short-term 2-year traded tad higher at 1.590 percent.

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