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Europe Roundup: Sterling eases as investors eye PM May's Brexit "Plan B", greenback consolidates amid holiday-thinned trading, European shares off 6-week peak - Monday, January 21st, 2019  

Market Roundup

  • EUR/USD 0.10%, USD/JPY -0.14%, GBP/USD -0.08%, EUR/GBP 0.18%
     
  • DXY -0.01%, DAX -0.45%, FTSE 0.22%, Brent -0.38%, Gold -0.21%
     
  • China's 2018 growth slows to 28-year low, more stimulus seen
     
  • UK households gloomy for 2019, lower inflation eases near-term worries
     
  • British PM to try to break Brexit deadlock with EU concessions
     
  • Sterling slips before May's Brexit "Plan B"
     
  • Germany Dec Producer Prices MM, -0.4%, -0.2% forecast, 0.1% previous
     
  • Germany Dec Producer Prices YY, 2.7%, 2.9% forecast, 3.3% previous
     

Economic Data Ahead

  • No major data release scheduled

Key Events Ahead

  • N/A ECB's Mario Draghi and Benoit Coeure participate in Eurogroup meeting – Brussels
     
  • (1030 ET/1530 GMT) PM May to present her Brexit plan B to UK parliament - London

FX Beat

DXY: The dollar index consolidated below a 2-week peak touched last week, amid thin trading volumes as the U.S. markets remained closed on account of Martin Luther King Jr.'s Birthday. The greenback against a basket of currencies trades flat at 96.35, having touched a high of 96.39 on Friday, its highest since Jan. 4. FxWirePro's Hourly Dollar Strength Index stood at 52.75 (Bullish) by 1100 GMT.

EUR/USD: The euro bounced from recent lows, as the greenback edged lower on speculation that the U.S. Federal Reserve would pause hiking interest rates and the economy would slow after a fiscal boost last year. The European currency traded 0.1 percent up at 1.1374, having touched a low of 1.1353 on Friday, its lowest since Jan. 4. FxWirePro's Hourly Euro Strength Index stood at 29.09 (Neutral) by 1100 GMT.  Immediate resistance is located at 1.1442 (December 10 High), a break above targets 1.1500 (November 7 High). On the downside, support is seen at 1.1345 (Jan. 4 Low), a break below could drag it till 1.1325 (Jan. 2 Low).

USD/JPY: The dollar eased as the U.S.-China trade dispute weighed on China's economy, with the latest data showing the Chinese economy slowing further in the fourth quarter of 2018. The major was trading 0.1 percent down at 109.61, having hit a high of 109.88 on Friday, its highest since December 31. FxWirePro's Hourly Yen Strength Index stood at 52.75 (Bearish) by 1100 GMT. Investors’ will continue to track the broad-based market sentiment, as the U.S. markets remain closed on account of Martin L. King's Birthday. Immediate resistance is located at 110.47 (Dec. 31 High), a break above targets 111.19 (Dec. 24 High). On the downside, support is seen at 108.70 (Jan. 2 Low), a break below could take it lower at 108.44 (Jan. 8 Low).

GBP/USD: Sterling declined to a near 1-week trough as investors remained cautious ahead of a statement from Prime Minister Theresa May in parliament on her plans to break a deadlock over Brexit. The major traded 0.1 percent down at 1.2858, having hit a high of 1.3000 on Thursday; it’s highest since November 15. FxWirePro's Hourly Sterling Strength Index stood at 80.30 (Slightly Bullish) 1100 GMT. Immediate resistance is located at 1.2929 (January 14 High), a break above could take it near 1.3030 (November 15 High). On the downside, support is seen at 1.2818 (January 14 Low), a break below targets 1.2764 (November 21 Low). Against the euro, the pound was trading 0.2 percent up at 88.44 pence, having hit a high of 87.63 on Thursday, it’s highest since November 15.

USD/CHF: The Swiss franc plunged to a 1-month low amid renewed hopes over the U.S.-China trade negotiations. The major trades 0.2 percent up at 0.9973, having touched a high of 0.9976; it’s highest since December 17. FxWirePro's Hourly Swiss Franc Strength Index stood at -19.68 (Neutral) by 1100 GMT. On the higher side, near-term resistance is around 0.9989 (December 14 High) and any break above will take the pair to next level till 1.0008 (December 5 High). The near-term support is around 0.9917 (December 17 Low), and any close below that level will drag it till 0.9889 (December 7 Low).

Equities Recap

European shares tumbled from a 6-week high after China's fourth-quarter growth figures confirmed a slowdown in the Chinese economy.

The pan-European STOXX 600 index slumped 0.2 percent at 356.26 points, while the FTSEurofirst 300 index plunged 0.3 percent to 1,400.93 points.

Britain's FTSE 100 trades 0.2 percent up at 6,983.25 points, while mid-cap FTSE 250 eased 0.01 to 18,764.46 points.

Germany's DAX declined 0.4 percent at 11,159.21 points; France's CAC 40 trades 0.2 percent lower at 4,868.19 points.

Commodities Recap

Crude oil prices declined from recent peaks as evidence that economic growth in China eased in 2018 dented market sentiment. International benchmark Brent crude was trading 0.1 percent down at $62.59 per barrel by 1047 GMT, having hit a high of $63.05, its highest since December 7. U.S. West Texas Intermediate was trading 0.1 percent lower at $53.77 a barrel, after rising as high as $54.14, its highest since the December 7.

Gold prices declined to a 2-week low as improving risk appetite sent investors seeking risky assets. Spot gold was 0.2 percent down at $1,278.76 per ounce by 1052 GMT, having touched a low of $1,277.45 earlier, its lowest level since Jan. 4. U.S. gold futures were steady at $1,282.10 an ounce.

Treasuries Recap

The German bunds rose during European session ahead of the country’s ZEW economic sentiment index for the month of January, scheduled to be released on January 22 by 10:00GMT and the European Central Bank’s (ECB) monetary policy decision, due on January 24 by 12:45GMT. The German 10-year bond yields, which move inversely to its price, slipped 1 basis point to 0.251 percent, the yield on 30-year note fell 1-1/2 basis points to 0.857 percent and the yield on short-term 2-year remained tad lower at -0.588 percent.

The Japanese government bonds remained mixed on the first trading day of the week ahead of the country’s trade balance data for the month of December, scheduled to be released today by 23:50GMT and the Bank of Japan’s (BoJ) monetary policy decision, due on January 23 for further direction in the debt market. The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained tad higher at 0.006 percent, the yield on the long-term 30-year note hovered around 0.700 percent while the yield on short-term 2-year slumped 17 basis points to -0.169 percent.

The Australian government bonds slumped across the curve during Asian trading session on hopes of an end to the U.S.-China trade spat. However, weak Chinese economic growth data limited further upside. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 1-1/2 basis points to 2.326 percent, the yield on the long-term 30-year bond climbed 1/2 basis point to 2.852 percent and the yield on short-term 2-year up about 2 basis points to 1.909 percent.

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