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Europe Roundup: Sterling steadies ahead of Brexit summit, euro near 2-week peak as investors eye ECB policy meet and FOMC meeting minutes, European shares surge - Wednesday, April 10th, 2019

Market Roundup

  • EUR/USD 0.1%, USD/JPY 0.03%, GBP/USD 0.09%, EUR/GBP -0.03%
     
  • DXY -0.07%, DAX 0.46%, FTSE 0.18%, Brent 0.59%, Gold -0.01%
     
  • ECB hopes to instil confidence in face of gloomy outlook
     
  • EU to grant May a Brexit delay, with conditions
     
  • Great Britain Feb GDP Estimate YY, 2.0%, 1.7% f'cast, 1.4% prev
     
  • Great Britain Feb Industrial Output YY, 0.1%, -0.9% f'cast, -0.9% prev
     
  • Great Britain Feb Manufacturing Output YY, 0.6% -0.7% f'cast, -1.1% prev
     
  • Great Britain Feb Goods Trade Balance GBP, -14.11 bln, -12.70 bln f'cast, -13.08 bln prev
     
  • Great Britain Feb Goods Trade Balance Non-EU, -5.841 bln, -4.500 bln f'cast, -4.977 bln prev
     
  • Great Britain Feb Services YY, 2.3%, 1.7% prev
     
  • France Feb Industrial Output MM, 0.4%, -0.5% f'cast, 1.3% prev
     
  • Italy Feb Industrial Output YY WDA, 0.9%, -0.9% f'cast, -0.8% prev
     
  • China's giant money market fund relaxes investment restrictions

Economic Data Ahead

  • (0745 ET/1145 GMT) The European Central Bank will announce its interest rate decision.
     
  • (0830 ET/1230 GMT) The U.S. consumer price index likely increased 0.3 percent in March after posting a rise of 0.2 percent in February, while in the 12 months through March, the CPI is expected to have risen 1.8 percent.  Excluding food and energy, the core CPI probably rose 0.2 percent, compared with a 0.1 percent increase in the previous month.
     
  • (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending April 5.
     
  • (1400 ET/1800 GMT) The U.S. reports its monthly budget statement for the month of March. The government's budget deficit narrowed to $180 billion from $234 billion in the previous month.
     

Key Events Ahead

  • N/A British Prime Minister Theresa May will hold a news conference in Brussels after meeting fellow EU leaders for an extraordinary summit.
     
  • (0830 ET/1230 GMT) European Central Bank President Mario Draghi holds a press conference after an interest rate meeting
     
  • (1105 ET/1505 GMT) BoE Monetary Policy Committee Member Dave Ramsden participates in Financial Stability Board Roundtable, Washington
     
  • (1150 ET/1550 GMT) Federal Reserve Vice Chair for Supervision Randal Quarles, BoE's Ramsden, U.S. CFTC Chairman J. Christopher Giancarlo and UK FCA CEO Andrew Bailey speak at a Financial Stability Board round-table discussion, Washington
     
  • (1400 ET/1800 GMT) FOMC will release the minutes from its March 19-20, 2019 policy meeting
     
  • (1400 ET/1800 GMT) ECB's Coeure participates in a seminar on 'Money and payments in the digital age' organised by the IMF in Washington, D.C
     

FX Beat

DXY: The dollar index declined, extending losses for the third straight session, amid renewed global trade disputes after Trump threatened to impose tariffs on $11 billion worth of EU products. The greenback against a basket of currencies traded 0.1 percent down at 96.95, having touched a peak of 97.52 last week, its highest since Mar. 8. FxWirePro's Hourly Dollar Strength Index stood at -129.01 (Highly Bearish) by 1000 GMT.

EUR/USD: The euro surged, hovering towards a near 2-week peak ahead of the European Central Bank policy meeting, where it is all but certain to keep policy on hold, although investors will be keen to see if the central bank provides more details on its plans to issue a new round of cheap multi-year loans to banks to support economic growth. The European currency traded 0.1 percent up at 1.1275, having touched a high of 1.1284 on Tuesday, its highest since Mar. 27. FxWirePro's Hourly Euro Strength Index stood at 105.91 (Highly Bullish) 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 dollar steadied after falling to a 9-day low in the prior session, as investors awaited the release of the U.S. consumer price index, which is likely to increase 0.3 percent in March after posting a rise of 0.2 percent in February. The major was trading 0.1 percent higher at 111.21, having hit a high of 111.82 on Friday, its highest since Mar. 15. FxWirePro's Hourly Yen Strength Index stood at -7.45 (Neutral) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. consumer price index, monthly budget statement and Fed Quarles speech. 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 110.80 (Apr. 1 Low), a break below could take it lower at 110.53 (Mar. 20 Low).

GBP/USD: Sterling surged as investors prepared for the European Union to grant Britain a second Brexit delay at an emergency summit that could reduce the threat of a no-deal exit. 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 -7.86 (Neutral) 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 1.3003 (Mar. 21 Low), a break below targets 1.2976 (Mar. 29 Low). Against the euro, the pound was trading 0.1 percent up at 86.20 pence, having hit a low of 86.51 on Tuesday, it’s lowest since Mar. 22.

USD/CHF: The Swiss franc plunged to a 3-week low as risk sentiment improved ahead of a Brexit summit and a policy meeting of the European Central Bank. The major trades 0.1 percent up at 1.0005, having touched a high of 1.0013; it’s highest since Mar. 19. FxWirePro's Hourly Swiss Franc Strength Index stood at -125.09 (Highly Bearish) 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 0.9967 (Apr. 3 Low), and any close below that level will drag it till 0.9937 (Mar. 28 Low)

Equities Recap

European shares rallied as investor awaited the Brexit summit and the European Central Bank policy meeting.

The pan-European STOXX 600 index gained 0.3 percent at 388.66 points, while the FTSEurofirst 300 index rallied 0.2 percent to 1,520.99 points.

Britain's FTSE 100 trades 0.05 percent up at 7,429.95 points, while mid-cap FTSE 250 gained 0.2 to 19,464.49 points.

Germany's DAX rose 0.4 percent at 11,902.56 points; France's CAC 40 trades 0.4 percent higher at 5,458.64 points.

Commodities Recap

Crude oil prices surged, hovering towards 5-month highs hit the previous day as OPEC production cuts and U.S. sanctions on Iran and Venezuela continued to tighten supply. International benchmark Brent crude was trading 0.2 percent up at $70.91 per barrel by 1036 GMT, having hit a high of $71.33, its highest since Nov. 12. U.S. West Texas Intermediate was trading 0.3 percent up at $64.40 a barrel, after rising as high as $64.77 on Tuesday, its highest since the Nov. 1.

Gold prices consolidated near the previous session's 2-week amid trade tensions between the United States and Europe. Spot gold traded flat at $1,303.76 per ounce by 1038 GMT, having touched a high of $1,306.09 on Tuesday, its highest since March 28. U.S. gold futures were also down about 0.1 percent at $1,307.60 an ounce.

Treasuries Recap

The U.S. Treasuries remained flat during European session ahead of the country’s consumer price inflation (CPI) data for the month of March, scheduled to be released today by 12:30GMT.  The yield on the benchmark 10-year Treasury yield remained flat at 2.502 percent, the super-long 30-year bond yields hovered around 2.913 percent and the yield on the short-term 2-year too traded flat at 2.342 percent.

The United Kingdom’s gilts suffered after the country’s gross domestic product (GDP) for the month of February and manufacturing production for the similar period, cheered market participants, albeit slowing from the previous reading in January. The yield on the benchmark 10-year gilts, hovered around 1.115 percent, the super-long 30-year bond yields remained flat at 1.656 percent and the yield on the short-term 2-year traded tad lower at 0.715 percent.

The German bunds remained tad lower during European trading session Wednesday ahead of the European Central Bank’s (ECB) monetary policy meeting, scheduled to be held today by 11:45GMT, besides, the country’s consumer price inflation (CPI) data for the month of May, due for release on April 11 by 06:00GMT, which shall provide further direction to the debt market. The German 10-year bond yields, which move inversely to its price, traded hardly higher at -0.001 percent, the yield on 30-year note remained tad higher at 0.635 percent and the yield on short-term 2-year traded flat at -0.573 percent.

The Japanese government bonds gained at the time of Asian close after investors’ risk sentiments took a bow following a global growth forecast downgrade by the International Monetary Fund (IMF) yesterday for this year, to 3.3 percent, lowest since 2009, from prior 3.5 percent. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slumped 6 basis points to -0.059 percent, the yield on the long-term 30-year slipped 1 basis point to 0.530 percent and the yield on short-term 2-year plunged 16-1/2 basis points to -0.165 percent.

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