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Europe Roundup: Sterling slumps as PM May struggle to secure Brexit deal, euro plunges as ECB cuts growth and inflation projections, European shares decline - Friday, December 14th, 2018

Market Roundup

  • Italy Nov 2018 CPI excluding tobacco m/m increase to 1.4 %
     
  • Italy Nov 2018 CPI excluding tobacco increase to 102.2
     
  • Italy Nov 2018 consumer prices final yy decrease to 1.6 % (forecast 1.7 %) vs previous 1.7 %
     
  • Italy Nov 2018 consumer prices final mm decrease to -0.2 % (forecast -0.1 %) vs previous -0.1 %
     
  • Italy Nov 2018 CPI (EU norm) final yy decrease to 1.6 % (forecast 1.7 %) vs previous 1.7 %
     
  • Italy Nov 2018 CPI (EU norm) final mm decrease to -0.3 % (forecast -0.2 %) vs previous -0.2 %
     
  • Eurozone Q3 2018 labour costs yy increase to 2.5 % vs previous 2.2 %
     
  • Eurozone Q3 2018 wages increase to 2.4 % vs previous 1.9 %
     
  • France Nov 2018 CPI mm nsa decrease to -0.21 % vs previous -0.1 %
     
  • Eurozone Dec 2018 Markit service flash PMI decrease to 51.4 diff.idx (forecast 53.5 diff.idx) vs previous 53.4 diff.idx
     
  • Eurozone Dec 2018 Markit composite flash PMI decrease to 51.3 diff.idx (forecast 52.8 diff.idx) vs previous 52.7 diff.idx
     
  • Eurozone Dec 2018 Markit manufacturing flash PMI decrease to 51.4 diff.idx (forecast 51.9 diff.idx) vs previous 51.8 diff.idx
     
  • Italy Oct 2018 industrial sales mm sa increase to -0.5 %
     
  • Italy Oct 2018 industrial orders mm sa increase to -0.3 % vs previous -3.1 % (revised from -2.9 %)
     
  • Italy Oct 2018 industrial sales yy wda decrease to 2 % vs previous 3.9 %
     
  • Italy Oct 2018 industrial orders yy nsa increase to 2 % vs previous -1 % (revised from -0.9 %)
     

Economic Data Ahead

  • (0830 ET/1330 GMT) The U.S. Commerce Department is expected to report that retail sales edged up 0.2 percent in November after advancing 0.8 percent in October. While excluding autos, retail sales are likely to have gained 0.3 percent, after surging 0.7 percent in the previous month.
     
  • (0915 ET/1415 GMT) The Federal Reserve is likely to report that industrial production rose 0.3 percent in November after increasing 0.1 in the prior month.
     
  • (0915 ET/1415 GMT) The Federal Reserve Board is expected to report that capacity utilization edged up to 78.5 percent in November from 78.4 percent in October.
     
  • (0945 ET/1445 GMT) Financial firm Markit releases U.S. preliminary Manufacturing PMI for the month of December. The index is likely edged up to 55.4 after posted a final reading of 55.3 in the previous month.
     
  • (0945 ET/1445 GMT) Markit Economics will release preliminary U.S. composite PMI for the month of December. The index posted a final reading of 54.7 in the prior month.
     
  • (0945 ET/1445 GMT) Financial firm Markit Economics is likely to report that preliminary U.S. service PMI business activity index rose to 54.7 in December after printing a similar reading in November.
     
  • (1000 ET/1500 GMT) The U.S. Commerce Department is expected to report that business inventories rose 0.5 percent in October after rising 0.3 percent in September.
     
  • (1300 ET/1800 GMT) Baker Hughes reports U.S. Oil Rig Count.
     

Key Events Ahead

  • (0830 ET/1330 GMT) ECB's Ignazio Angeloni speaks at Rome Investment Forum 2018 "Invest in Europe"
     
  • (0915 ET/1415 GMT) Federal Reserve issues Industrial Production for November
     
  • (1000 ET/1500 GMT) German Economy Minister Peter Altmaier speaks in Berlin
     

FX Beat

DXY: The dollar index surged to a 1-month peak as the Federal Reserve is expected to raise interest rates and give guidance on the pace of any tightening next year at it's Dec. 18-19 meeting. The greenback against a basket of currencies trades 0.4 percent up at 97.46, having touched a high of 97.58 earlier, its highest since Nov 13. FxWirePro's Hourly Dollar Strength Index stood at 86.62 (Slightly Bullish) by 1000 GMT.

EUR/USD: The euro slumped to an over 2-week low after the European Central Bank cut projections for economic growth and inflation, raising concerns about a eurozone slowdown and the central bank's caution as it ends its bond-buying programme. Moreover, data showing German private-sector expansion slowed to a four-year low in December, and French business activity unexpectedly contracted added to the euro's woes. The European currency traded 0.6 percent down at 1.1295, having touched a low of 1.1287, its lowest since Nov. 28. FxWirePro's Hourly Euro Strength Index stood at -79.02 (Slightly Bearish) by 1000 GMT. Immediate resistance is located at 1.1401 (November 29 High), a break above targets 1.1455 (November 2 High). On the downside, support is seen at 1.1267 (November 28 Low), a break below could drag it till 1.1215 (November 12 Low).

USD/JPY: The dollar retreated from a near 2-week peak touched in the prior session, as weak economic data from China and Europe stoked concerns of a global economic slowdown. The major was trading 0.05 percent down at 113.53, having hit a high of 113.70 on Thursday, its highest since December 3. FxWirePro's Hourly Yen Strength Index stood at 24.98 (Neutral) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. retail sales, capacity utilization, industrial production, and Markit flash PMI's. Immediate resistance is located at 113.72 (November 30 High), a break above targets 114.03 (November 28 High). On the downside, support is seen at 113.18 (November 29 Low), a break below could take it lower 112.66 (October 23 Low),

GBP/USD: Sterling plunged, reversing most of its previous session gains, as investors worried Prime Minister Theresa May was struggling to secure assurances from the European Union over her Brexit withdrawal deal. The major traded 0.6 percent down at 1.2585, having hit a low of 1.2476 on Wednesday; it’s lowest since mid-April 2017. FxWirePro's Hourly Sterling Strength Index stood at 95.40 (Slightly Bullish) 1000 GMT. Immediate resistance is located at 1.2700, a break above could take it near 1.2754. On the downside, support is seen at 1.2553, a break below targets 1.2515. Against the euro, the pound was trading 0.05 percent down at 89.77 pence, having hit a low of 90.87 on Monday, it’s lowest since August 29.

USD/CHF: The Swiss franc tumbled to a 1-week low as the greenback rallied to a 1-month peak on increasing expectations that the Federal Reserve will hike interest rates at next week's policy meeting. The major trades 0.2 percent up at 0.9962, having touched a high of 0.9976; it’s highest since December 6. FxWirePro's Hourly Swiss Franc Strength Index stood at -55.89 (Bearish) by 1000 GMT. On the higher side, near-term resistance is around 0.9980 (Nov. 23 High) and any break above will take the pair to next level till 1.0000 (December 5 High). The near-term support is around 0.9889 (Dec. 7 Low), and any close below that level will drag it till 0.9847 (Oct. 15 Low).

Equities Recap

European shares tumbled as weak Chinese data renewed worries about the health of the world's second-largest economy and potential damage from the U.S.-China trade dispute.

The pan-European STOXX 600 index plunged 1.2 percent at 345.19 points, while the FTSEurofirst 300 index declined 0.9 percent to 1,366.40 points.

Britain's FTSE 100 trades 0.9 percent down at 6,816.44 points, while mid-cap FTSE 250 fell 0.9 to 17,644.86 points.

Germany's DAX declined 1.5 percent at 10,763.71 points; France's CAC 40 trades 1.3 percent lower at 4,835.39 points.

Commodities Recap

Crude oil prices declined after China reported slower economic growth, indicating lower fuel demand in the world's biggest oil importer. International benchmark Brent crude was trading 0.5 percent down at $61.36 per barrel by 1004 GMT, having hit a high of $63.67 last week, its highest since November 22. U.S. West Texas Intermediate was trading 0.5 percent down at $52.56 a barrel, after rising as high as $54.20 last week, its highest since the December 5.

Gold prices declined to a 1-week low and were poised to post their biggest weekly drop in five weeks as investor focus shifted towards an expected U.S. interest rate hike next week. Spot gold was 0.1 percent lower at $1,239.35 per ounce by 1010 GMT, having touched a low of $1,237.29, its lowest level since December 7 and was down about 0.8 percent so far for the week. U.S. gold futures were down 0.38 percent at $1,242.6 per ounce.

Treasuries Recap

The U.S. Treasuries climbed during late afternoon session ahead of the country’s retail sales data for the month of November, scheduled to be released today by 13:30GMT. The headline retail figure is likely to come in on the soft side weighed by a slowing of new auto sales and lower prices of gasoline, although a decent showing around the Thanksgiving Holiday should provide some support. The yield on the benchmark 10-year Treasuries slumped 3 basis points to 2.881 percent, the super-long 30-year bond yields fell 2 basis points to 3.143 percent and the yield on the short-term 2-year remained 3 basis points lower at 2.731 percent.

The German bunds jumped during European session after the country’s manufacturing PMI for the month of December disappointed market expectations, amid a muted trading session that witnessed data of little economic significance. The German 10-year bond yields, which move inversely to its price, slumped 2-1/2 basis points to 0.257 percent, the yield on 30-year note fell nearly 2 basis point to 0.882 percent and the yield on short-term 2-year too traded 2 basis points lower at -0.600 percent

The Japanese government bond yields were bruised by weakness in the Chinese economic data, released early today, as investors’ sentiments were hurt, with the benchmark Nikkei 225 down over 2 percent at the time of closing on the last trading day of the week. The yield on the benchmark 10-year JGB note, which moves inversely to its price, plunged to its lowest since July this year to 0.040 percent, the yield on the long-term 30-year note also suffered to 0.80 percent and the yield on short-term 2-year lost 15 basis points to -0.150 percent.

The Australian government bonds gained across the curve during Asian session as investors remain cautious ahead of any breakthrough in U.S.-China trade deal. Global equity and bond markets had a mixed performance overnight. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 2 basis points to 2.458 percent, the yield on the long-term 30-year bond also dipped 2-1/2 basis points to 2.984 percent and the yield on short-term 2-year down 1-1/2 basis points to 1.993 percent.

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June 26 15:30 UTC Released

BRForeign Exchange Flows

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0.343 Bln USD

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2.761 Bln USD

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USEIA Weekly Gasoline O/P

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0.089 M

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0.147 M

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-1541 %

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-1541 %

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2016 bln ARS

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