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Europe Roundup: Sterling steadies after Barnier says EU ready for Brexit delay, dollar eases against yen amid renewed geopolitical tensions, oil at 5-month peak - Tuesday, April 9th, 2019

Market Roundup

  • EUR/USD 0.27%, USD/JPY 0.04%, GBP/USD 0.34%, EUR/GBP -0.11%
  • DXY -0.21%, DAX -0.24%, FTSE -0.18%, Brent -0.14%, Gold 0.29%
  • May dashes to Berlin and Paris to plot way out of Brexit impasse
  • Barnier: EU ready for Brexit delay, length depends on British argument
  • U.S. Attorney General Barr to appear before Congress for first time since Mueller report
  • EU plans for own retaliation in aircraft dispute with U.S.
  • Aramco breaks record as demand for its bond tops $85 billion
  • Global regulators sharpen focus on looser lending, Brexit risk
  • Great Britain Mar BRC Retail Sales YY, -1.10%, -0.10% prev

Economic Data Ahead

  • (1000 ET/1400 GMT) The U.S. Labor Department releases Job Openings and Labor Turnover Survey (JOLTS) report for the month of February. The report is expected to show job openings rose to 7.550 million from 7.581 million in January.
  • (1000 ET/1400 GMT) The Investor's Business Daily (IBD)/ TechnoMetrica Institute of Policy and Politics (TIPP) will release U.S. Economic Optimism index for the month of April. The indicator rose to 55.7 in March
  • (1630 ET/2030 GMT) API reports its weekly crude oil stock.

Key Events Ahead

  • (0805 ET/1205 GMT) Riksbank Deputy Governor Henry Ohlsson speaks at a conference organised by the Swedish Unions within Industry, Balsta
  • (1700 ET/2100 GMT) Federal Reserve Vice Chair for Supervision Randal Quarles participates in discussion before the George Mason University "Meet the Policymakers" Forum for Students, Arlington
  • (1800 ET/2245 GMT) Federal Reserve Vice Chairman Richard Clarida speaks on the first day of the two-day Spring 2019 Institute Conference, Minneapolis

FX Beat

DXY: The dollar index plunged to a near 2-week trough, following subdued U.S. data and gains in commodity-linked currencies driven by surging oil prices. The greenback against a basket of currencies traded 0.1 percent down at 96.93, having touched a peak of 97.52 last week, its highest since Mar. 8. FxWirePro's Hourly Dollar Strength Index stood at -21.43 (Neutral) by 1000 GMT.

EUR/USD: The euro rallied to a near 2-week peak after data showed Italian retail sales rose 0.1 percent in February, following a 0.6 percent increase in January that helped to ease some concerns over the eurozone economic slowdown. Investors now eye Wednesday's European Central Bank meeting that could provide fresh insight on the central bank's short term monetary policy outlook. The European currency traded 0.1 percent up at 1.1276, having touched a high of 1.1280, its highest since Mar. 27. FxWirePro's Hourly Euro Strength Index stood at 42.04 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1285 (Mar. 28 High), a break above targets 1.1331 (Mar. 25 High). On the downside, support is seen at 1.1213 (Mar. 28 Low), a break below could drag it till 1.1176 (Mar. 7 Low).

USD/JPY: The Japanese yen surged to a 6-day low, as Japan appears to have avoided a recession thanks to resilient business spending. Moreover, U.S. threat to impose tariffs on hundreds of European goods further intensified the selling pressure around the pair. The major was trading 0.2 percent down at 111.30, having hit a high of 111.82 on Friday, its highest since Mar. 15. FxWirePro's Hourly Yen Strength Index stood at 65.31 (Bullish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. JOLTS Job Openings and IBD/TIPP economic optimism. Immediate resistance is located at 111.92 (Mar. 6 High), a break above targets 112.13 (Mar. 5 High). On the downside, support is seen at 111.06 (Mar. 13 Low), a break below could take it lower at 110.74 (Mar. 8 Low).

GBP/USD: Sterling steadied below the 1.3100 handle after the European Union’s Barnier stated that EU was ready for Brexit delay, but the length depends on British argument. The major traded 0.2 percent up at 1.3081, having hit a low of 1.2986 on Friday; it’s lowest since Mar. 29. FxWirePro's Hourly Sterling Strength Index stood at -102.50 (Highly Bearish) 1000 GMT. Immediate resistance is located at 1.3149 (Apr. 1 High), a break above could take it near 1.3196 (Apr. 3 High). On the downside, support is seen at 1.3003 (Mar. 21 Low), a break below targets 1.2976 (Mar. 29 Low). Against the euro, the pound was trading 0.05 percent up at 86.15 pence, having hit a low of 86.45 on Monday, it’s lowest since Mar. 29.

USD/CHF: The Swiss franc eased, halting 2-days of rally, as a surge in oil prices to 5-month highs boosted most commodity-linked currencies. The major trades 0.1 percent up at 0.9993, having touched a high of 1.0012 on Friday; it’s highest since Mar. 19. FxWirePro's Hourly Swiss Franc Strength Index stood at 36.82 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 1.0024 (Feb. 22 High) and any break above will take the pair to next level till 1.0052 (Mar. 15 High). The near-term support is around 0.9937 (Mar. 28 Low), and any close below that level will drag it till 0.9895 (Jan.17 Low).

Equities Recap

European shares surged, supported by gains in banking stock, however, U.S. threat to impose tariffs on hundreds of European goods limited upside.

The pan-European STOXX 600 index gained 0.3 percent at 388.69 points, while the FTSEurofirst 300 index rallied 0.3 percent to 1,528.25 points.

Britain's FTSE 100 trades 0.1 percent up at 7,459.35 points, while mid-cap FTSE 250 fell 0.2 to 19,478.90 points.

Germany's DAX rose 0.05 percent at 11,969.33 points; France's CAC 40 trades 0.2 percent higher at 5,480.45 points.

Commodities Recap

Crude oil prices surged to a 5-month high, boosted by concern that violence in Libya could further tighten supply already squeezed by OPEC cuts and U.S. sanctions on Iran and Venezuela.  International benchmark Brent crude was trading 0.05 percent up at $71.10 per barrel by 1016 GMT, having hit a high of $71.33, its highest since Nov. 12. U.S. West Texas Intermediate was trading 0.2 percent up at $64.56 a barrel, after rising as high as $64.77, its highest since the Nov. 1.

Gold prices rose, hovering towards a more than one week peak touched in the previous session as the greenback eased on weak U.S. economic data. Spot gold was 0.4 percent up at $1,302.13 per ounce, by 1019 GMT, having touched a high of $1,303.61 on Monday, its highest since March 28. U.S. gold futures were up 0.1 percent at $1,303 an ounce.

Treasuries Recap

The government bond yields in the euro area were a touch lower, amid concern about U.S./European trade tensions. Germany's benchmark 10-year bond yield hovered just below zero percent in early trade but is up 9 basis points from 2-1/2 year lows of minus 0.09 percent hit last month.

The Japanese government bond prices fell slightly, with the 5-year and 10-year JGB yields rising 0.5 basis points each to minus 0.165 percent and minus 0.045 percent, respectively. The 30-year yield rose 1 basis point to 0.540 percent.

The Australian government bond futures were a shade softer on the day, with the three-year bond contract off half a tick at 98.605. The 10-year contract dipped 1 tick to 98.1050. The yields on New Zealand government bonds rose 2 to 3 basis points across the curve.

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