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Europe Roundup: Sterling gains as poll shows Conservative lead, Swiss franc at 1-1/2 month low on trade deal optimism, European shares at 4-year peak - Wednesday, November 27th, 2019

Market Roundup

  • Gold slips on Trump's comments
     
  • Oil steadies despite U.S. stockpile build
     
  • YouGov poll showed Conservative lead narrowing
     

Economic Data Ahead

  • (0830 ET/1330 GMT)  The U.S. Commerce Department releases personal income figures for October, which is expected to rise 0.3 percent.
     
  • (0830 ET/1330 GMT) The U.S. Commerce Department releases the personal consumption expenditures (PCE) price index for the month of October. The index rose at an annualized rate of 1.2 percent in the prior month, while core PCE is likely to have increased 0.1 percent after staying unchanged in the previous month.
     
  • (0830 ET/1330 GMT) The U.S. Personal spending is likely to rise 0.3 percent in the month of October after surging 0.2 percent in September.
     
  • (0830 ET/1330 GMT) The U.S. Commerce Department is expected to report that preliminary gross domestic product increased at a 1.9 percent annual rate in the third quarter.
     
  • (0830 ET/1330 GMT) The U.S. durable goods orders are expected to have decreased 0.8 percent in October after declining 1.2 percent in September, while non-defense capital goods orders excluding aircraft are likely to have eased 0.3 percent after falling 0.6 percent the prior month.
     
  • (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 6,000 to a seasonally adjusted 227,000 for the week ended Nov. 22, while continuing claims for the week ended Nov. 15 is expected to decline to 1.69 million from previous week's reading of 1.695 million.
     
  • (1000 ET/1500 GMT) The National Association of Realtors is likely to report that U.S. pending home sales increased 0.8 percent in October after rising 1.5 percent in September.
     
  • (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending November 22.
     
  • (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending November 22.
     
  • (1400 ET/1900 GMT) The Fed issues its Beige Book, a summary of anecdotes on the health of the economy.
     

Key Events Ahead

  • No significant event scheduled

FX Beat

DXY: The dollar index surged to a 2-week peak, as investors await the Fed’s Beige Book of the economic condition among other data due later in the day. The greenback against a basket of currencies traded up at 98.30, having touched a high of 98.40 earlier, its highest since November 14.

EUR/USD: The euro plunged to a 2-week low as recent weak eurozone data continued to undermine investor risk sentiment. The European currency traded 0.1 percent down at 1.1008, having touched a low of 1.1002 earlier its lowest since November 14. Immediate resistance is located at 1.1040 (10-DMA), a break above targets 1.1065 (21-DMA). On the downside, support is seen at 1.0995, a break below could drag it below 1.0966.

USD/JPY: The dollar rallied against the safe-haven Japanese yen, boosted by comments from President Donald Trump, stating that the United States and China are close to an agreement after top negotiators spoke by telephone and agreed to keep working on remaining issues. The major was trading 0.1 percent up at 109.14, having hit a high of 109.20 on Tuesday, its highest since November 12. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. personal consumption expenditure, core-personal consumption expenditure, durable goods, personal income, personal spending, unemployment benefit claims, gross domestic product price index and pending home sales. Immediate resistance is located at 109.25 (November 5 High), a break above targets 109.48 (November 7 High). On the downside, support is seen at 108.87 (Nov. 26 Low), a break below could take it near at 108.69 (10-DMA).

GBP/USD: Sterling rose, reversing most of its previous session losses, as polls continued to show the ruling Conservatives as runaway favourites to win the December 12 election. The major traded 0.1 percent up at 1.2882, having hit a low of 1.2829 on Friday, it’s lowest since November 13. Investors’ attention will remain on the development surrounding the general elections, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2911, a break above could take it near 1.2930. On the downside, support is seen at 1.2823, a break below targets 1.2794. Against the euro, the pound was trading 0.2 percent up at 85.46 pence, having hit a low of 86.05 on Friday, it’s lowest since Nov. 12.

USD/CHF: The Swiss franc tumbled to a 1-1/2 month trough as optimism over a U.S.-China trade agreement boosted investor sentiment. The major trades at 0.1 percent up at 0.9978, having touched a high of 0.9987 earlier, it’s highest since October 16. On the higher side, near-term resistance is around 0.9995 and any break above will take the pair to the next level till 1.0027. The near-term support is around 0.9949 (5-DMA), and any close below that level will drag it till 0.9921 (10-DMA).

Equities Recap

European shares advanced to a 4-year high in early trading as comments from U.S. President Donald Trump stoked hopes of an imminent resolution to the drawn-out trade war with China.

The pan-European STOXX 600 index rallied 0.4 percent at 409.96 points, while the FTSEurofirst 300 surged 0.4 percent to 1,603.62 points.

Britain's FTSE 100 trades 0.4 percent up at 7,434.50 points, while mid-cap FTSE 250 rose 0.3 to 20,924.74 points.

Germany's DAX rose 0.4 percent at 13,292.04 points; France's CAC 40 trades 0.1 percent higher at 5,937.04 points.

Commodities Recap

Crude oil prices rallied to a 2-month peak as an industry report showing a surprise boost in U.S. crude inventories was offset by optimism about a U.S.-China trade deal being agreed. International benchmark Brent crude was trading 0.5 percent up at $64.45 per barrel by 1121 GMT, having hit a high of $64.46 earlier, its highest since September 24. U.S. West Texas Intermediate was trading 0.4percent up at $58.52 a barrel, after rising as high as $58.71 on Friday, its highest since September 23.

Gold prices declined after U.S. President Donald Trump’s comment that Washington was close to an interim trade deal with China boosted demand for riskier assets. Spot gold eased 0.2 percent to $1,459.10 per ounce by 1123 GMT, having touched a low of $1449.92 on Tuesday, its lowest since Nov. 12. U.S. gold futures shed 0.1percent to $1,458.70.

Treasuries Recap

The U.S. Treasury yields were lower, with benchmark 10-year yields last at 1.741 percent, down from 1.79 percent on Monday.

The core European government debt was steady, with yields on benchmark German 10-year bonds holding above one-month lows. Benchmark German 10-year bond yields were flat at -0.377 percent, holding above a November low of -0.384 percent.

The Japanese government bond prices rose after the BoJ board member Makoto Sakurai said the central bank would only consider expanding stimulus if overseas risks triggered a financial crisis. The benchmark 10-year JGB futures rose 0.19 point to 153.51. The 10-year JGB yield fell 1 basis point to minus 0.110 percent. The 20-year JGB yield fell 2 basis points to 0.235 percent. The 30-year JGB yield fell 2 basis points to 0.390 percent, while the 40-year JGB yield was unchanged at 0.440 percent. The five-year yield fell 1 basis point to minus 0.210 percent. At the short end of the yield curve, the two-year JGB yield fell 0.5 basis point to minus 0.195 percent.

The Aussie 10-year yields were now 28 basis points below NZ yields, compared to 11 basis points early this month.

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