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Europe Roundup: Sterling steadies after inflation holds below BoE target, euro at 3-week peak on Italy Tria's comments, European shares off 8-month peak - Wednesday, April 17th, 2019 

Market Briefs

  • EUR/USD 0.24%, USD/JPY 0.03%, GBP/USD -0.02%, EUR/GBP 0.25%
     
  • DXY -0.15%, DAX 0.19%, FTSE -0.01%, Brent 0.70%, Gold -0.02%
     
  • London slump drags UK house price growth to more than six-year low
     
  • Great Britain Mar Core CPI YY, 1.8%, 1.9% f'cast, 1.8% prev
     
  • Great Britain Mar RPI YY, 2.4%, 2.6% f'cast, 2.5% prev
     
  • Great Britain Mar PPI Input Prices YY NSA, 3.7%, 3.9% f'cast, 3.7% prev, 4.0% rvsd
     
  • Great Britain Mar PPI Output Prices YY, 2.4%, 2.1% f'cast, 2.2% prev, 2.4% rvsd
     
  • EU goods trade surplus with U.S. grows, deficit with China widens
     
  • US raises trade deficit concerns with Japan, no deal on individual issues
     
  • German government slashes 2019 growth forecast to 0.5 pct
     
  • EZ Mar HICP Final YY, 1.4%, 1.4% f'cast, 1.4% prev
     
  • EZ Feb Current Account SA (EUR), 26.80 bln, 36.83 bln prev, 37.10 bln rvsd
     
  • China's Q1 growth unexpectedly steadies, but too early to call clear recovery
     

Economic Data Ahead

  • (0830 ET/1230 GMT) The United States releases trade balance figures for the month of February. The economy's trade deficit is expected to have widened to $53.7 billion from 51.1 billion in January.
     
  • (0830 ET/1230 GMT) Statistics Canada is likely to report that international trade deficit narrowed to C$3.50 billion in February from C$4.25 billion in January.
     
  • (0830 ET/1230 GMT) Statistics Canada is expected to report that the annual inflation rate rose 1.9 percent in March from 1.5 percent in February.
     
  • (1000 ET/1400 GMT) The U.S. Census Bureau is likely to report that wholesale inventories rose 0.5 percent in December after posting a gain of 1.2 percent in the prior month.
     
  • (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending April 12.
     
  • (1400 ET/1800 GMT) The Fed issues its Beige Book, a summary of anecdotes on the health of the economy.
     

Key Events Ahead

  • (0900 ET/1300 GMT) Bank of England Governor Mark Carney's speech
     
  • (1030 ET/1430 GMT) ECB's Sabine Lautenschlaeger takes part in a discussion at a conference organised by the Network for Greening the Financial System in Paris
     
  • (1230 ET/1630 GMT) Federal Reserve Bank of St. Louis President James Bullard gives a presentation on the U.S. economy and monetary policy in Annandale-on-Hudson
     
  • (1230 ET/1630 GMT) Federal Reserve Bank of Philadelphia President Patrick Harker speaks on the economic outlook before a luncheon in Vineland, New Jersey
     
  • (1900 ET/2300 GMT) Federal Reserve Bank of New York Senior Vice President Lorie Logan speaks before the Money Marketeers of New York University
     

FX Beat

DXY: The dollar index declined after the United States raised concerns over its trade deficit with Japan, with no agreement reached on individual issues after two days of discussions in the first round of negotiations on a new bilateral trade deal. The greenback against a basket of currencies traded 0.1 percent down at 96.92, having touched a low of 96.75 on Friday, its lowest since Mar. 27. FxWirePro's Hourly Dollar Strength Index stood at 24.43 (Neutral) by 1000 GMT.

EUR/USD: The euro rallied to a 3-week peak after Italy's Economy Minister Giovanni Tria stated that the Italian economy showed encouraging developments in the first two months of this year. Moreover, data showing the European Union's trade surplus in goods with the United States increased in the first two months of 2019 boosted the bid tone around the major. The European currency traded 0.3 percent up at 1.1309, having touched a high of 1.1323 earlier, its highest since Mar. 26. FxWirePro's Hourly Euro Strength Index stood at 41.69 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1331 (Mar. 25 High), a break above targets 1.1361 (Mar. 19 High). On the downside, support is seen at 1.1255 (Apr. 9 Low), a break below could drag it till 1.1213 (Mar. 28 Low).

USD/JPY: The dollar advanced to a 4-month peak as investor risk sentiment improved after better-than-expected Chinese data eased concerns about a global economic slowdown. The major was trading 0.05 percent up at 112.07, having hit a high of 112.16, its highest since Dec. 20. FxWirePro's Hourly Yen Strength Index stood at -28.84 (Neutral) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. trade balance, wholesale inventories, and Fed Bullard's speech. Immediate resistance is located at 112.60 (Dec. 20 High), a break above targets 113.24 (Dec. 5 High). On the downside, support is seen at 111.20 (Apr. 3 Low), a break below could take it lower at 110.53 (Mar. 20 Low).

GBP/USD: Sterling steadied after falling to a 1-week low earlier in the session after data showed British consumer price index rose slightly slower than expected in March, easing the pressure on the Bank of England to tighten monetary policy. The economy's annual consumer price inflation came in at 1.9 percent in March, below estimates for a 2 percent rise and below the BoE's target of 2 percent. The major traded 0.05 percent up at 1.3051, having hit a low of 1.3031; it’s lowest since Apr. 9. FxWirePro's Hourly Sterling Strength Index stood at -57.27 (Bearish) 1000 GMT. Immediate resistance is located at 1.3121 (Apr. 5 High), a break above could take it near 1.3149 (Apr. 1 High). On the downside, support is seen at 1.3022 (Apr. 8 Low), a break below targets 1.3003 (Mar. 21 Low). Against the euro, the pound was trading 0.3 percent down at 86.66 pence, having hit a low of 86.80, it’s lowest since Mar. 22.

USD/CHF: The Swiss franc fell to a 5-week low as better-than-expected first-quarter economic growth in China revived investor risk sentiment. The major trades 0.1 percent up at 1.0086, having touched a high of 1.0088; it’s highest since Mar. 12. FxWirePro's Hourly Swiss Franc Strength Index stood at -143.14 (Highly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 1.0098 (Feb. 14 High) and any break above will take the pair to next level till 1.0124 (Mar. 7 High). The near-term support is around 0.9967 (Apr. 3 Low), and any close below that level will drag it till 0.9937 (Mar. 28 Low)

Equities Recap

European shares slipped from 8-month highs, weighed down by losses in healthcare and mining stocks.

The pan-European STOXX 600 index eased 0.05 percent at 388.81 points, while the FTSEurofirst 300 index declined 0.05 percent to 1,528.95 points.

Britain's FTSE 100 trades 0.05 percent up at 7,472.05 points, while mid-cap FTSE 250 gained 0.05 to 19,934.67 points.

Germany's DAX rose 0.1 percent at 12,116.22 points; France's CAC 40 trades 0.2 percent higher at 5,539.21 points.

Commodities Recap

Crude oil prices rose to their 2019 highs, boosted by steady economic growth in China and a fall in U.S. crude stocks which defied expectations and signalled firm demand. International benchmark Brent crude was trading 0.4 percent higher at $72.10 per barrel by 0956 GMT, having hit a high of $72.21, its highest since Nov. 8. U.S. West Texas Intermediate was trading 0.2 percent up at $64.41 a barrel, after rising as high as $64.77 last week, its highest since the Nov. 1.

Gold prices declined, hovering towards a near 4-month trough as better-than-expected economic readings from China sharpened risk appetite. Spot gold was 0.1 percent down at $1,275.41 per ounce by 1000 GMT, having touched a low of $1,272.86 on Tuesday, its lowest since Dec. 27. U.S. gold futures were up 0.3 percent to $1,281.20 an ounce.

Treasuries Recap

The British 10-year gilt yields rose to their highest level in just over a month, supported by faster-than-expected Chinese economic growth. Ten-year gilt yields rose 3 basis points on the day to 1.248 pct, their highest level since March 14, while two-year yields rose by a similar amount to touch their highest level since March 4 at 0.828 percent.

The German 10-year yield rose 3 basis points to a 4-week high of 0.101 percent, up almost 20 basis points from a 2-1/2-year low below zero hit last month.

The 10-year Japanese government bond futures contract hit a 3-month low as better-than-expected growth data from China soothed global economic slowdown fears. Ten-year JGB futures dropped 0.13 points to 152.37, their lowest levels since Jan. 9. The yield on benchmark 10-year JGBs rose one basis point to a 6-week high of minus 0.015 percent. In the super-long zone, the 40-year yield jumped four basis points to a three-week high of 0.595 percent. The 30-year climbed three basis points to a four-week high of 0.570 percent, while the 20-year yield added 2.5 basis points to a five-week high of 0.400 percent.

The Australian government bond futures were weaker, with the three-year bond contract down 2 ticks at 98.550, while the 10-year contract eased 3 ticks to 98.03. The New Zealand government bonds yields were down about 6-7 basis points in the short-end of the curve.

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