Menu

Search

  |   Market Roundups

Menu

  |   Market Roundups

Search

Europe Roundup: Sterling slumps below 1.2700 on Brexit negotiation concerns, dollar index at 13-month peak ahead of U.S. retail sales, European shares tumble - Wednesday, August 15th, 2018

Market Roundup

  • EUR/USD -0.19%, USD/JPY 0.10%, GBP/USD -0.06%, EUR/GBP -0.15%
     
  • DXY 0.10%, DAX -0.03%, FTSE -0.40%, Brent -1.17%, Gold -0.63%
     
  • Turkey doubles tariffs on some U.S. imports; lira rallies
     
  • China vows to control debt despite fresh stimulus for cooling economy
     
  • China says U.S. solar tariffs violate trade rules, lodges WTO complaint
     
  • Great Britain Jul CPI YY, 2.5%, 2.5% forecast, 2.4% previous
     
  • Great Britain Jul Core CPI YY, 1.9%, 1.9% forecast, 1.9% previous
     
  • Great Britain Jul PPI Input Prices YY NSA, 10.9%, 10.4% forecast, 10.2% previous, 10.3% revised
     
  • Great Britain Jul PPI Output Prices YY NSA, 3.1%, 3.0% forecast, 3.1% previous, 3.3% revised
     
  • Great Britain Jul RPI YY, 3.2%, 3.4% forecast, 3.4% previous
     
  • Sterling stuck near 13-month lows after inflation data
     
  • Swiss National Bank's Zurbruegg says franc rise justifies loose policy
     
  • Significant short-term market impact to no-deal Brexit -UK's Hunt

Economic Data Ahead

  • (0830 ET/1230 GMT) The Federal Reserve Bank of New York is expected to report that manufacturing activity index grew to 20 percent in August after rising 22.6 in July.
     
  • (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that retail sales edged up 0.1 percent in July after advancing 0.5 percent in June. While excluding autos, retail sales are likely to have gained 0.3 percent, after surging 0.4 percent in the previous month.
     
  • (0830 ET/1230 GMT) The U.S. Labor Department will release preliminary labor costs report for the second quarter. The indicator is expected to nudge up 0.3 percent after posting a gain of 2.9 percent in the previous quarter.  
     
  • (0830 ET/1230 GMT) The U.S. Labor Department is likely to report that non-farm productivity rose 2.3 percent in the second quarter from 0.4 percent in the previous quarter.
     
  • (0915 ET/1315 GMT) The Federal Reserve is likely to report that industrial production rose 0.3 percent in July, after increasing 0.6 in the prior month.
     
  • (0915 ET/1315 GMT) The Federal Reserve Board is expected to report that capacity utilization edged up to 78.2 percent in July from 78.8 percent in June.
     
  • (1000 ET/1400 GMT) The U.S. Commerce Department is expected to report that business inventories rose 0.1 percent in June, after rising 0.4 percent in May.
     
  • (1000 ET/1400 GMT) The National Association of Home Builders (NAHB) is expected to report that U.S. Housing Market Index eased to 67 in August, after rising to 68 in July.
     
  • (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending August 10.
     

Key Events Ahead

  • No significant events scheduled.

FX Beat

DXY: The dollar index surged to a 13-month peak on the back of demand emerging from concerns about Turkey's financial turbulence. The greenback against a basket of currencies trades 0.3 percent up at 96.90, having touched a high of 96.92 earlier, its highest since July 2017. FxWirePro's Hourly Dollar Strength Index stood at 80.25 (Slightly Bullish) by 1000 GMT.

EUR/USD: The euro plunged to a fresh 13-month low as worries over the Turkish lira collapse on eurozone banks with exposure to Turkey and concerns about a fiscal spending spree by the Italian government weighed heavily on investor sentiment. The European currency traded 0.3 percent down at 1.1312, having touched a low of 1.1310, its lowest since June 2017. FxWirePro's Hourly Euro Strength Index stood at -104.12 (Highly Bearish) by 1000 GMT. Immediate resistance is located at 1.1385 (23.6% retracement of 1.1628 and 1.1310), a break above targets 1.1469 (50% retracement). On the downside, support is seen at 1.1300, a break below could drag it till 1.1260.

USD/JPY: The dollar surged to a 1-week high on signs the U.S. economy remains robust ahead of an expected interest rate hike by the Federal Reserve next month. The major was trading 0.05 percent up at 111.17, having hit a high of 111.43 earlier, its highest since August 8. FxWirePro's Hourly Yen Strength Index stood at 65.07 (Bullish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. retail sales, industrial production, capacity utilization, prelim Q2 unit labor cost and business inventories. Immediate resistance is located at 111.71 (78.6% retracement of 112.15 and 110.11), a break above targets 112.15 (August 1 Low). On the downside, support is seen at 110.94 (5-DMA), a break below could take it lower 110.58 (August 1 Low).

GBP/USD: Sterling slumped to a 13-month low, below the1.2700 handle after data showed UK retail sales rose 0.1 percent, below a forecast of 0.2 percent and previous reading of 0.3 percent. Moreover, increasing worries that the UK will leave the European Union next year without a trade deal arranged weighed heavily on the British pound. The major traded 0.1 percent down at 1.2702, having hit a low of 1.2691 earlier; it’s lowest since June. 2017. FxWirePro's Hourly Sterling Strength Index stood at 19.72 (Neutral) 1000 GMT. Immediate resistance is located at 1.2830 (23.6% retracement of 1.3173 and 1.2722), a break above could take it near 1.2948 (50% retracement). On the downside, support is seen at 1.2675, a break below targets 1.2640. Against the euro, the pound was trading 0.1 percent up at 89.07 pence, having hit a high of 88.96 on Tuesday, it’s highest since August 6.

USD/CHF: The Swiss franc slumped to an over 1-week low as the greenback rallied to multi-month peaks. The major trades 0.3 percent down at 0.9974, having touched a high of 0.9982, it’s highest since August 6. FxWirePro's Hourly Swiss Franc Strength Index stood at -18.41 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 1.0010 (July 20 High) and any break above will take the pair to next level till 1.0043 (July 19 High). The near-term support is around 0.9920 (August 13 Low) and any close below that level will drag it till 0.9894 (August 9 Low).

Equities Recap

European shares declined as the Turkish currency crisis continued to weigh on investor sentiment, while sterling slumped below the 1.2700 handle on Brexit negotiations concerns.

The pan-European STOXX 600 index plunged 0.4 percent at 383.35 points, while the FTSEurofirst 300 index slumped 0.6 percent to 1,497.26 points.

Britain's FTSE 100 trades 0.8 percent down at 7,544.84 points, while mid-cap FTSE 250 eased 0.4 percent to 20,429.06 points.

Germany's DAX fell 0.1 percent at 12,343.25 points; France's CAC 40 trades 0.4 percent higher at 5,382.63 points.

Commodities Recap

Crude oil prices declined, extending losses for the third straight session, weighed down by a gloomier global economic outlook and a report of increasing U.S. crude inventories. International benchmark Brent crude was trading 0.3 percent down at $71.92 per barrel by 1042 GMT, having hit a low of $71.02 on Monday, its lowest since April 18. U.S. West Texas Intermediate was trading 0.5 percent lower at $66.28 a barrel, after falling as low as $65.74 on Monday, its lowest since June 21.

Gold prices slumped to a more than 18-month low as the dollar rallied to an over 13-month peak on demand emerging from concerns about Turkey's financial turmoil. Spot gold was 0.7 percent down at $1,184.62 an ounce at 1044 GMT, having hit a low of $1188.32, its lowest since January 26, 2017. U.S. gold futures were down 0.47 percent at $1,195 an ounce.

Treasuries Recap

The U.S. Treasuries jumped ahead of several top-tier releases, including July’s retail sales and IP reports. The yield on the benchmark 10-year Treasuries slumped 2-1/2 basis points to 2.87 percent, the super-long 30-year bond yields also lost nearly 2-1/2 basis points to 3.04 percent and the yield on the short-term 2-year traded nearly 1-1/2 basis points lower at 2.62 percent.

The German bunds remained higher during European session amid a quiet trading session in the euro area with no new top-tier economic data due today. The German 10-year bond yields, which move inversely to its price, slumped 1-1/2 basis points to 0.31 percent, the yield on 30-year note also fell 1-1/2 basis points to 0.98 percent while the yield on short-term 2-year traded flat at -0.63 percent.

The New Zealand bonds closed up on Wednesday as investors still remain uncertain over Turkey’s political chaos, although sentiments have started to stabilize, with the CBRT’s intervention to adopt measures in controlling the lira’s downtrend. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slipped nearly 1 basis point to 2.59 percent, the yield on the long-term 20-year note also fell 1 basis point to 2.92 percent and the yield on short-term 2-year closed 1 basis point lower at 1.72 percent.

The Japanese government bonds remained flat in a muted trading session as investors wait to watch the country’s trade balance data for the month of July, scheduled to be released today by 23:50GMT. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 1/2 basis point to 0.100 percent, the yield on the long-term 30-year note hovered around 0.847 percent and the yield on short-term 2-year traded tad lower at -0.115 percent.

The Australian government bonds surged during Asian session as political woes from Turkey lingered on despite measures by the Central Bank of Turkey (CBRT) to control the free fall in the lira. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, slumped nearly 2-1/2 basis points to 2.562 percent, the yield on the long-term 30-year Note fell 2 basis points to 3.054 percent and the yield on short-term 2-year traded tad lower at 2.001 percent.

  • Market Data
Close

Welcome to EconoTimes

Sign up for daily updates for the most important
stories unfolding in the global economy.