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Europe Roundup: Sterling off highs ahead of Brexit deal debate, euro slumps as German industrial output unexpectedly eases, European shares at 3-week peak - Tuesday, January 8th, 2019

Market Roundup

  • EUR/USD -0.24%, USD/JPY 0.01%, GBP/USD -0.13%, EUR/GBP -0.10%
     
  • DXY 0.18%, DAX 0.14%, FTSE 0.54%, Brent 1.38%, Gold -0.41%
     
  • EZ Dec Consumer Confidence Final, -6.2, -6.2 f'cast, -6.2 previous
     
  • EZ Dec Industrial Sentiment, 1.1, 2.9 forecast, 3.4 previous
     
  • EZ Dec Economic Sentiment, 107.3, 108.2 forecast, 109.5 previous
     
  • EZ Dec Services Sentiment, 12.0, 12.3 forecast, 13.3 previous, 13.4 revised
     
  • EZ Dec Business Climate, 0.82, 0.99 forecast, 1.09 previous, 1.04 revised
     
  • Germany Nov Industrial Output MM, -1.9%, 0.3% forecast, -0.5% previous, -0.8% revised
     
  • German Economy Minister Peter Altmaier says economic upswing to continue
     
  • Great Britain Dec Halifax House Prices MM, 2.2%, 0.2% forecast, -1.4% previous
     
  • UK, European officials discussing possible Brexit delay - Telegraph
     
  • Sterling hovers near one-week high before Brexit deal debate
     

Economic Data Ahead

  • (0830 ET/1330 GMT) The United States releases trade balance figures for the month of November. The economy's trade deficit is expected to have narrowed to $54.0 billion from 55.5 billion in October.
     
  • (0830 ET/1330 GMT) The Statistics Canada is likely to report that international trade deficit widened to C$1.95 billion in November from C$1.17 billion in October.
     
  • (1000 ET/1500 GMT) The U.S. Labor Department releases Job Openings and Labor Turnover Survey (JOLTS) report for the month of November. The report showed job openings rose to 7.079 million in October.
     
  • (1500 ET/2000 GMT) The U.S. Federal Reserve is likely to report that consumer credit declined to $18.0 billion in November from $25.38 billion the month before.
     
  • (1630 ET/2130 GMT) API reports its weekly crude oil stock
     

Key Events Ahead

  • No significant events scheduled

FX Beat

DXY: The dollar index rose after U.S. Commerce Secretary Wilbur Ross said there was a good chance Beijing and Washington would reach a trade deal. The greenback against a basket of currencies trades 0.2 percent up at 95.82, having touched a low of 95.64 on Monday, its lowest since Oct. 22. FxWirePro's Hourly Dollar Strength Index stood at -61.39 (Bearish) by 1000 GMT.

EUR/USD: The euro plunged after data showed German industrial output unexpectedly fell in November for the third consecutive month, adding to signs that companies are shifting into a lower gear due to mounting risks from a global trade war. The European currency traded 0.3 percent down at 1.1444, having touched a high of 1.1484 earlier, its highest since Jan. 2. FxWirePro's Hourly Euro Strength Index stood at 3.90 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1485 (December 20 High), a break above targets 1.1527 (October 18High). On the downside, support is seen at 1.1393 (November 19 Low), a break below could drag it till 1.1360 (December 7 Low).

USD/JPY: The dollar surged to a 6-day high, amid hopes that Washington and Beijing may be moving towards a trade deal. The major was trading 0.05 percent up at 108.70, having hit a low of 104.65 last week, its lowest since March 26. FxWirePro's Hourly Yen Strength Index stood at -69.46 (Bearish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. trade balance, JOLTS job opening and consumer credit change. Immediate resistance is located at 109.46 (April 26 High), a break above targets 109.73 (June 1 High). On the downside, support is seen at 108.02 (January 7 Low), a break below could take it lower 107.65 (April 23 Low).

GBP/USD: Sterling slumped from a 1-week peak hit earlier in the day, as investors remained cautious as Britain's parliament prepared for a debate on Prime Minister Theresa May's Brexit withdrawal agreement ahead of next week's vote. The major traded 0.2 percent down at 1.2749, having hit a low of 1.2373 on Thursday; it’s lowest since April 2017. FxWirePro's Hourly Sterling Strength Index stood at 6.45 (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 1.2715 (January 7 Low), a break below targets 1.2661 (August 15 Low). Against the euro, the pound was trading 0.05 percent down at 89.74 pence, having hit a low of 90.92 on Thursday, it’s lowest since August 18.

USD/CHF: The Swiss franc eased, reversing some of its previous session gains, as the greenback rebounded from a 2-1/2-month low touched in the previous session. The major trades 0.1 percent up at 0.9807, having touched a high of 0.9920 on Wednesday; it’s highest since December 27. FxWirePro's Hourly Swiss Franc Strength Index stood at 91.37 (Slightly Bullish) by 1000 GMT. On the higher side, near-term resistance is around 0.9856 (October 1 High) and any break above will take the pair to next level till 0.9906 (January 3 High). The near-term support is around 0.9770, and any close below that level will drag it till 0.9737 (September 28 Low).

Equities Recap

European shares advanced to a 3-week high as hopes of a possible trade deal between China and the U.S. offset worries over global growth.

The pan-European STOXX 600 index rallied 0.6 percent at 345.12 points, while the FTSEurofirst 300 index gained 0.8 percent to 1,362.83 points.

Britain's FTSE 100 trades 0.8 percent up at 6,865.81 points, while mid-cap FTSE 250 rose 1.1 to 18,162.93 points.

Germany's DAX rose 0.3 percent at 10,776.53 points; France's CAC 40 trades 0.8 percent lower at 4,756.93 points.

Commodities Recap

Crude oil prices rose by more than 1 percent, supported by hopes that talks in Beijing between the U.S. and Chinese officials might defuse a trade dispute between the world's two biggest economies. International benchmark Brent crude was trading 1.2 percent down at $58.25 per barrel by 1059 GMT, having hit a high of $58.90 on Monday, its highest since December 18. U.S. West Texas Intermediate was trading 0.9 percent higher at $49.17 a barrel, after rising as high as $49.77 on Monday, its highest since the December 17

Gold prices declined as risk appetite improved on speculation China and the United States may be closing on a trade deal. Spot gold was down 0.4 percent at $1,283.33 at 1102 GMT, having touched a high of $1,298.42 on Friday, its highest level since June 15. U.S. gold futures were 0.5 percent lower at $1,283.10 per ounce.

Treasuries Recap

The U.S. Treasuries fell mixed during late afternoon session ahead of the country’s November JOLTs job openings data and the 3-year note auction, both scheduled for today by 15:00GMT and 18:00GMT respectively. The yield on the benchmark 10-year Treasuries rose nearly 1-1/2 basis points to 2.694 percent, the super-long 30-year bond yields edged nearly 1 basis point higher to 2.984 percent while the yield on the short-term 2-year plunged nearly 3 basis points to 2.551 percent.

The United Kingdom’s gilts slumped during the afternoon session, ahead of the Bank of England (BoE) Governor Mark Carney’s speech, due to be held on January 9 at 15:30GMT. The yield on the benchmark 10-year gilts, jumped nearly 2 basis points to 1.275 percent, the super-long 30-year bond yields also surged 2 basis points to 1.801 percent and the yield on the short-term 2-year traded 1 basis point higher at 0.774 percent

 The German bunds suffered during European session despite the fall in the country’s industrial production for the month of November, released earlier today. Investors will now keep an eye over the country’s 10-year auction, scheduled to be held on January 9 by 10:40GMT for further direction in the debt market. The German 10-year bond yields, which move inversely to its price, jumped 3 basis points to 0.241 percent, the yield on 30-year note surged nearly 2 basis points to 0.884 percent while the yield on short-term 2-year traded 1 basis point up at -0.574 percent.

The Japanese government bonds remained flat on the second trading day of the week ahead of the country’s 30-year auction and November household spending data, both scheduled to be released on January 10 by 03:35GMT and 23:30GMT respectively. The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained flat at -0.016 percent, the yield on the long-term 30-year note hovered around 0.682 percent and the yield on short-term 2-year too traded steady at -0.165 percent.

The Australian government bonds sunk during Asian session, tracking a similar movement in the U.S. Treasuries following progress in the U.S.-China trade talks, coupled with healthy employment data last week. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped 4-1/2 basis points to 2.323 percent, the yield on the long-term 30-year bond surged nearly 4 basis points to 2.819 percent and the yield on short-term 2-year traded 2 basis points to 1.900 percent.

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February 22 20:00 UTC Released

USFCOJ Stock

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0.548 Pounds B

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0.529 Pounds B

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495.624 Pounds M

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514.72 Pounds M

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-1541 %

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2016 bln ARS

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