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Europe Roundup: Sterling eases on UK general election possibility, greenback rebounds from near 3-1/2 month lows amid mixed signals from U.S.-China trade talks, European shares slump - Thursday, January 10th, 2019

Market Roundup

  • Greece Oct 2018 unemployment rate (month) stays flat at 18.6 % vs previous
     
  • Italy Nov 2018 retail sales nsa yy stays flat at 1.6 % vs previous 1.6 % (revised from 1.5 %)
     
  • Italy Nov 2018 retail sales sa mm increase to 0.7 % vs previous 0.2 % (revised from 0.1 %)
     
  • France Nov 2018 industrial output mm decrease to -1.3 % vs previous 1.3 % (revised from 1.2 %)

Economic Data Ahead

  • (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 6,000 to a seasonally adjusted 225,000 for the week ended Jan. 4, while continuing claims for the week ended Dec. 28 is expected to decline to 1.714 million from a previous reading of 1.740 million.
     
  • (0830 ET/1330 GMT) The Statistics Canada is likely to report that building permits dropped 0.5 percent in November, extending October's decline of  0.2 percent.
     
  • (0830 ET/1330 GMT) The Statistics Canada releases its New Housing Price Index (NHPI) for the month of November. The index remained flat in October.
     
  • (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending January 4.

Key Events Ahead

  • (0730 ET/1230 GMT) The European Central Bank publishes the minutes of the December policy meeting in Frankfurt 
     
  •  (0830 ET/1330 GMT) Federal Reserve Bank of Philadelphia issues historical revisions to Manufacturing Business Outlook Survey in Philadelphia
     
  •  (0835 ET/1335 GMT) Richmond Fed President Thomas Barkin speaks in North Carolina to the Greater Raleigh Chamber of Commerce at its 2019 Economic Forecast event in Raleigh, N.C., United States
     
  • (1230 ET/1730 GMT) Federal Reserve Bank of St. Louis President James Bullard gives presentation on the U.S. economy and monetary policy before the Little Rock Chamber of Commerce Power Up Little Rock event in Little Rock, Ark.
     
  •  (1230 ET/1730 GMT) French Central Bank Governor Francois Villeroy de Galhau gives speech on economic prospects for Europe in 2019, with Luxembourg central bank chief also in attendance in Luxembourg.
     
  •  (1245 ET/1745 GMT) Federal Reserve Chairman Jerome Powell speaks before the Economic Club of Washington in Washington D.C.
     
  • (1300 ET/1800 GMT) Federal Reserve Bank of Chicago President Charles Evans speaks on current economic conditions and monetary policy before the Milwaukee Business Journal Economic Forecast event in Milwaukee, United States
     
  •  (1320 ET/1820 GMT) Federal Reserve Bank of Minneapolis President Neel Kashkari speaks on immigration and economic growth before a Jewish Community Relations Council luncheon in Minneapolis, Minnesota.
     

FX Beat

DXY: The dollar index rebounded from a near 3-month low after China stated that the three days of talks in Beijing had established a platform to resolve the differences between both the economies, however, no clarity was given on key issues. The greenback against a basket of currencies trades 0.1 percent up at 95.23, having touched a low of 95.03 earlier, its lowest since Oct. 16. FxWirePro's Hourly Dollar Strength Index stood at -123.81 (Highly Bearish) by 1000 GMT.

EUR/USD: The euro declined from a near 3-month peak, as the German industry called on the European Union to adopt a tougher policy towards China and urged companies to reduce their dependence on the Chinese market. The European currency traded 0.1 percent down at 1.1528, having touched a high of 1.1569 earlier, its highest since Oct. 17. FxWirePro's Hourly Euro Strength Index stood at 58.66 (Bullish) by 1000 GMT. Immediate resistance is located at 1.1599 (October 11 High), a break above targets 1.1621 (October 16 High). On the downside, support is seen at 1.1505 (October 2 Low), a break below could drag it till 1.1463 (October 4 Low).

USD/JPY: The dollar plunged to a 6-day low, weighed down by mixed signals from U.S.-China trade talks, growing expectations that the Federal Reserve will pause its rate tightening cycle this year and an impasse between U.S. President Donald Trump and Democrats on funding for a border wall. The major was trading 0.05 percent down at 108.11, having hit a low of 107.77 earlier, its lowest since Jan. 4. FxWirePro's Hourly Yen Strength Index stood at -69.34 (Bearish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims, and speeches from Fed officials. Immediate resistance is located at 109.08 (January 8 High), a break above targets 109.46 (April 26 High). On the downside, support is seen at 107.65 (April 23 Low), a break below could take it lower 107.35 (April 20 Low).

GBP/USD: Sterling eased from an over 1-week peak touched in the previous session after British Prime Minister Theresa May lost two Brexit-related votes in two days, triggering worries of a general election. The major traded 0.3 percent down at 1.2755, having hit a high of 1.2803 on Wednesday; it’s highest since December 31. FxWirePro's Hourly Sterling Strength Index stood at -22.24 (Neutral) 1000 GMT. Immediate resistance is located at 1.2815 (December 31 High), a break above could take it near 1.2884 (November 19 High). On the downside, support is seen at 1.2706 (January 8 Low), a break below targets 1.2680 (December 31 Low). Against the euro, the pound was trading 0.1 percent down at 90.37 pence, having hit a low of 90.53 earlier, it’s lowest since January 3.

USD/CHF: The Swiss franc retreated from a 3-1/2 month peak as the greenback surged on news that U.S.-China trade talks ended without any clarity. The major trades 0.2 percent up at 0.9760, having touched a low of 0.9716 earlier; it’s lowest since September 27. FxWirePro's Hourly Swiss Franc Strength Index stood at -43.86 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 0.9819 (September 28 High) and any break above will take the pair to next level till 0.9856 (October 1 High). The near-term support is around 0.9695 (September 12 Low), and any close below that level will drag it till 0.9623 (September 26 Low).

Equities Recap

European shares slumped, as optimism over U.S.-China trade talks faded, while sterling eased on the rising possibility of UK general election. 

The pan-European STOXX 600 index plunged 0.3 percent at 346.68 points, while the FTSEurofirst 300 index eased 0.2 percent to 1,365.15 points.

Britain's FTSE 100 trades 0.1 percent down at 6,898.80 points, while mid-cap FTSE 250 declined 0.05 to 18,409.59 points.

Germany's DAX fell 0.3 percent at 10,860.71 points; France's CAC 40 trades 0.6 percent lower at 4,783.78 points.

Commodities Recap

Crude oil prices declined after rising to a 1-month peak in the previous session, amid a lack of clear resolution to U.S.-China trade talks and rising fuel stocks in the United States. International benchmark Brent crude was trading 0.1 percent down at $61.19 per barrel by 1037 GMT, having hit a high of $61.66 on Wednesday, its highest since December 14. U.S. West Texas Intermediate was trading 0.1 percent lower at $52.10 a barrel, after rising as high as $52.56 on Wednesday, its highest since the December 14.

Gold prices eased as the greenback rebounded from recent lows following news that U.S.-China trade talks ended without any clarity on when, or whether, a deal might be secured. Spot gold was 0.1 percent down at $1,292.23 per ounce by 1045 GMT, having touched a high of $1,298.42 on Friday, its highest level since June 15. U.S. gold futures gained 0.4 percent to $1,297.20 per ounce.

Treasuries Recap

The U.S. Treasuries climbed during late afternoon session ahead of the country’s weekly initial jobless claims, scheduled to be released today by 13:30GMT, besides, FOMC member Barkin and Chair Jerome Powell’s speech, due for later in the day. The yield on the benchmark 10-year Treasuries plunged nearly 3 basis points to 2.701 percent, the super-long 30-year bond yields edged 1-1/2 basis points lower to 3.008 percent and the yield on the short-term 2-year slumped nearly 2-1/2 basis points to 2.541 percent.

The United Kingdom’s gilts remained narrowly mixed during late afternoon session ahead of the country’s November manufacturing production and trade balance data, both scheduled to be released on January 11 by 09:30GMT respectively. The yield on the benchmark 10-year gilts, slipped 1 basis point to 1.251 percent, the super-long 30-year bond yields rose 1 basis point to 1.791 percent and the yield on the short-term 2-year surged 1-1/2 basis points higher at 0.762 percent.

The German bunds gained during European session amid a muted trading session that lacked data of major economic significance ahead of the European Central Bank (ECB) member Mersch’s speech, scheduled to be held on January 11 by 08:20GMT. The German 10-year bond yields, which move inversely to its price, slipped 1 basis point to 0.205 percent, the yield on the 30-year note fell nearly 1-1/2 basis points to 0.853 percent and the yield on short-term 2-year traded 1 basis point down at -0.587 percent.

The Australian government bonds gained during the Asian session, tracking a similar movement in the U.S. Treasuries on hopes of fewer interest rate hikes by the Federal Reserve. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 2-1/2 basis points to 2.305 percent, the yield on the long-term 30-year bond fell 1-1/2 basis points to 2.825 percent and the yield on short-term 2-year traded nearly 1 basis point lower at 1.895 percent.

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April 24 23:50 UTC Released

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