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Europe Roundup: Sterling steadies amid political uncertainty, euro at 2-1/2 week peak on EZ economic data, European shares surge - Friday, April 12th, 2019

Market Roundup

  • EUR/USD 0.56%, USD/JPY 0.24%, GBP/USD 0.12%, EUR/GBP 0.36%
     
  • DXY -0.31%, DAX 0.57%, FTSE 0.45%, Brent 1.06%, Gold 0.15%
     
  • EU Feb Industrial Production MM, -0.2%, -0.6% f'cast, 1.4% prev 1.9% rvsd
     
  • EU Feb Industrial Production YY, -0.3%, -1.0% f'cast, -1.1% prev -0.7% rvsd
     
  • Germany Mar Wholesale Price Index MM, 0.3%, 0.3% prev
     
  • Germany Mar Wholesale Price Index YY, 1.8%, 1.6% prev
     
  • Germany to halve 2019 growth forecast -government source
     
  • China March exports rebound to 5-mth high but imports fall more than expected
     
  • China March new loans rebound sharply, more policy easing expected
     
  • Kim Jong Un consolidates power as N.Korea shuffles leadership
     

Economic Data Ahead

  • (0830 ET/1230 GMT) The U.S. Labor Department publishes the import and export prices index for the month of March. The import prices are likely to have gained 0.4 percent after rising 0.6 percent in February, while exports are expected to have edged up 0.2 percent after increasing 0.6 percent in the prior month.
     
  • (1000 ET/1400 GMT) The University of Michigan is likely to report that U.S. preliminary consumer sentiment index declined to 98.0 in April, after posting a final reading of 98.4 in March.
     
  • (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
     

Key Events Ahead

  • N/A Spring meeting of the World Bank Group and IMF in Washington D.C.
     
  • (0845 ET/1245 GMT) ECB's Peter Praet takes part in an event organised by Goldman Sachs in New York
     
  • (1230 ET/1630 GMT) Germany's Olaf Scholz holds a speech at the Peterson Institute for International Economics in Washington D.C
     
  • (1400 ET/1800 GMT) Bank of Canada Deputy Governor Timothy Lane gives a speech

FX Beat

DXY: The dollar index plunged to a 2-week low after Minneapolis Federal Reserve Bank President Neel Kashkari on Thursday stated that he still favors caution on rate hikes because the U.S. economy is not yet at maximum sustainable employment levels amid tame inflation. The greenback against a basket of currencies traded 0.3 percent down at 96.84, having touched a low of 96.83, its lowest since Mar. 28. FxWirePro's Hourly Dollar Strength Index stood at -90.57 (Slightly Bearish) by 1000 GMT.

EUR/USD: The euro rose to a 2-1/2 week high after data showed Eurozone industrial output declined less than expected in February, as mild weather indicated that a surge in energy production at the start of 2019 reversed. The European currency traded 0.5 percent up at 1.1307, having touched a high of 1.1319, its highest since Mar. 26. FxWirePro's Hourly Euro Strength Index stood at 129.01 (Highly Bullish) 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 1.1213 (Mar. 28 Low), a break below could drag it till 1.1176 (Mar. 7 Low).

USD/JPY: The dollar rallied to a 1-month peak as investor risk sentiment improved after data showed China's exports rebounded to a 5-month peak March, suggesting signs of stabilization in the Chinese economy.  The major was trading 0.3 percent up at 111.94, having hit a low of 110.84 on Wednesday, its lowest since Apr. 1. FxWirePro's Hourly Yen Strength Index stood at -108.10 (Highly Bearish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. import and export price index, and Fed Michigan consumer sentiment index. Immediate resistance is located at 112.13 (Mar. 5 High), a break above targets 112.60 (Dec. 20 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 below the 1.3100 handle, after European Union leaders this week agreed to an up to 6-month extension to Brexit, easing the immediate threat of a no-deal exit for Britain. However, the likelihood of months of political uncertainty in the United Kingdom limited the upside in the British pound. The major traded 0.2 percent up at 1.3078, having hit a low of 1.2986 last week; it’s lowest since Mar. 29. FxWirePro's Hourly Sterling Strength Index stood at 26.12 (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 1.3022 (Apr. 8 Low), a break below targets 1.3003 (Mar. 21 Low). Against the euro, the pound was trading 0.3 percent down at 86.48 pence, having hit a low of 86.57, it’s lowest since Mar. 22.

USD/CHF: The Swiss franc rebounded from a near 1-month low, as anxiety over the global growth outlook sent investors seeking safety in safe-haven assets. The major trades 0.2 percent down at 1.0007, having touched a high of 1.0046 on Thursday; it’s highest since Mar. 15. FxWirePro's Hourly Swiss Franc Strength Index stood at 59.56 (Bullish) by 1000 GMT. On the higher side, near-term resistance is around 1.0052 (Mar. 15 High) and any break above will take the pair to next level till 1.0084 (Mar. 13 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 surged, boosted by signs of stabilization in China's economy, while sterling held firm after the European Union leaders postponed Britain's exit from the bloc to Oct. 31.

The pan-European STOXX 600 index gained 0.1 percent at 387.34 points, while the FTSEurofirst 300 index rallied 0.1 percent to 1,522.60 points.

Britain's FTSE 100 trades 0.5 percent up at 7,453.61 points, while mid-cap FTSE 250 gained 0.4 to 19,691.71 points.

Germany's DAX rose 0.6 percent at 12,003.40 points; France's CAC 40 trades 0.4 percent higher at 5,507.59 points.

Commodities Recap

Crude oil prices rose, hovering towards 2019 highs, boosted by involuntary supply cuts from Venezuela, Libya and Iran supported perceptions of a tightening market, and production reduction deal from OPEC and its allies. International benchmark Brent crude was trading 0.9 percent higher at $71.57 per barrel by 0947 GMT, having hit a high of $71.76 on Wednesday, its highest since Nov. 8. U.S. West Texas Intermediate was trading 1.2 percent up at $64.44 a barrel, after rising as high as $64.77 on Tuesday, its highest since the Nov. 1.

Gold prices edged up after posting its biggest daily percentage decline in two weeks in the prior session as the greenback plunged on Fed's dovish stance on policy outlook. Spot gold was 0.2 percent up at $1,295.36 per ounce by 0951 GMT, having touched a high of $1,310.47 on Wednesday, its highest since March 28. U.S. gold futures gained 0.2 percent to $1,295.40 an ounce.

Treasuries Recap

The U.S. Treasury yields jumped on the last trading day of the week ahead of today’s preliminary University of Michigan’s consumer confidence survey for April, scheduled for release at 14:00GMT. The yield on the benchmark 10-year Treasury yield jumped 3-1/2 basis points to 2.538 percent, the super-long 30-year bond yields climbed 2 basis points to 2.957 percent and the yield on the short-term 2-year remained 3 basis points higher at 2.387 percent.

The German bunds slumped during European trading session tracking eurozone’s better-than-expected industrial production data for the month of February, released early today amid an otherwise, muted trading session that witnessed data of little economic significance. The German 10-year bond yields, which move inversely to its price, jumped 2-1/2 basis points to 0.021 percent, the yield on 30-year note climbed 3 basis points to 0.669 percent and the yield on short-term 2-year traded nearly 1 basis point higher at -0.591 percent.

The Australian government bonds plunged during Asian session after the United States 30-year Treasury yield touched 3-week high tracking a solid reading of the latter’s labour market, unveiled late yesterday. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped nearly 3 basis points to 1.887 percent, the yield on the long-term 30-year bond surged 3-1/2 basis points to 2.522 percent and the yield on short-term 2-year traded 1 basis point higher at 1.495 percent.

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July 2 15:00 UTC Released

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