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Europe Roundup:Sterling weakens on rate-cut expectations, European shares fall,Gold gains, U.S. crude drops below $50-February 26th,2020

Market Roundup

• Italian Jan Trade Balance Non-EU  -0.28B, 5.77B previous    

• Swiss Feb ZEW Expectations  7.7, 8.3 previous

• France Jobseekers Total 3,264.8K, 3,292.9K previous

Looking Ahead - Economic Data (GMT)  
 
• 15:00 US Jan New Home Sales  710K forecast, 694K previous

• 15:00 US Jan New Home Sales (MoM)  3.5%,-0.4% previous

• 15:30  US Crude Oil Inventories 2.005M forecast, 0.414M previous

• 15:30 US Gasoline Production 0.284M previous

• 17:30 Brazil Foreign Exchange Flows 1.878B previous

• 18:00 Brazil  CAGED Net Payroll Jobs -307.31K previous 
           
Looking Ahead - Events, Other Releases (GMT)    

• 14:35  US FOMC Member Kaplan Speech    
Fx Beat  
 
EUR/USD: The euro gained against dollar on Wednesday  as investors shunned riskier assets on concerns about economic fallout from the fast-spreading coronavirus.   Concerns escalated after the U.S. Centers for Disease Control and Prevention (CDC) alerted Americans to prepare for the spread of the deadly virus. The euro was last trading up 0.3% at $1.0796 . Immediate resistance can be seen at 1.0913 (21 DMA), an upside break can trigger rise towards 1.0961 (30 DMA).On the downside, immediate support is seen at 1.0848  (5 DMA), a break below could take the pair towards 1.0800 (Psychological level).

GBP/USD:  Sterling slipped lower against dollar on Wednesday as expectations grew the Bank of England would cut interest rates, but it remained near its high for February on optimism that loose fiscal policy would boost Britain’s economy.The spread of the coronavirus has led some investors to believe central banks will be forced to loosen monetary policy to shield their economies. In the UK, money markets are pricing in a 25-basis-point cut in the current 0.75% rate by August.  Immediate resistance can be seen at 1.3004 (30 DMA), an upside break can trigger rise towards 1.3050(55 DMA).On the downside, immediate support is seen at 1.2853 (20th Feb low), a break below could take the pair towards 1.2800 (Psychological level).

USD/CHF: The dollar dipped against the Swiss franc on Wednesday as worries over the spread of the virus drove investors to safe haven assets.  The effects of the outbreak are likely to reverberate beyond China as most major economies in the region are expected to either slow significantly, halt or shrink in the current quarter  . At (GMT 12:29), Greenback dipped 0.02% versus the Swiss franc to 0.9756. Immediate resistance can be seen at 0.9761 (21 DMA), an upside break can trigger rise towards 0.9782 (5 DMA).On the downside, immediate support is seen at 0.9818 (5 DMA), a break below could take the pair towards 0.9788 (11 DMA).

USD/JPY: The dollar strengthened against the Japanese yen on Wednesday as investors scaled back expectations that the U.S. Federal Reserve would signal more policy easing in response to a deadly virus spreading outside China. However, broader market sentiment remained cautious, with implied volatility gauges on euro/dollar rising to 4-1/2 month highs while commodity currencies like the Australian and the kiwi dollar came under fresh selling pressure. Strong resistance can be seen at 110.50 (11 DMA), an upside break can trigger rise towards 111.00(Psychological level ).On the downside, immediate support is seen at 109.93 (21 DMA), a break below could take the pair towards 109.60  (50 DMA). 

Equities Recap

European shares fell for a fifth straight session on Wednesday, as investors fretted over the growing impact of a fast-spreading coronavirus that has pushed companies world-wide to sound the alarm on earnings.

At (GMT 12:38),UK's benchmark FTSE 100 was last trading lowerat 0.45 percent, Germany's Dax was down by 0.57 percent, France’s CAC was last up by 0.41 percent.
Commodities Recap

Gold prices rose on Wednesday after a sharp drop in the previous session, as a U.S. warning of an inevitable pandemic prompted investors to seek refuge in safe-haven assets.

Spot gold rose 0.7% to $1,646.19 per ounce by 0826 GMT, having slumped as much as 1.9% in the previous session. On Monday, prices touched their highest in more than seven years at $1,688.66. U.S. gold futures eased 0.1% to $1,648.30.

U.S. crude dropped below $50 on Wednesday, the lowest level since January 2019, as Asia, Europe and oil producing countries in the Middle East reported hundreds of new coronavirus cases and the United States warned of an inevitable pandemic.

Brent crude fell 89 cents, or 1.6%, to $54.06 a barrel by 1041 GMT, while U.S. West Texas Intermediate crude dropped 59 cents, or 1.1%, to $49.31 a barrel.

Treasuries Recap

U.S.: The U.S. Treasuries slumped during Wednesday’s afternoon session ahead of the country’s 5-year auction, due to be held today by 18:00GMT. Also, speeches by FOMC members, Kaplan and Kashkari, awaiting to be delivered today by 14:35GMT and 18:00GMT respectively, shall add further direction to the debt market. The yield on the benchmark 10-year Treasury yield jumped 4 basis points to 1.370 percent, the super-long 30-year bond yield surged 5-1/2 basis points to trade at 1.858 percent and the yield on the short-term 2-year edged tad nearly 1 basis point up to 1.199 percent.

UK: The United Kingdom’s gilts gained during European trading hours Wednesday ahead of a host of speeches by members of the Bank of England’s (BoE) Monetary Policy Committee (MPC), all due to be delivered through this week, for further direction in the debt market. The yield on the benchmark 10-year gilts, lost nearly 2 basis points to 0.504 percent, the 30-year yield also suffered 2 basis points to 0.942 percent and the yield on the short-term 2-year slumped 2-1/2 basis points to 0.363 percent.

EUR: The German bunds remained mixed during afternoon session Wednesday ahead of the European Central Bank’s (ECB) Governor Christine Lagarde’s speech, due to be delivered today by 13:30GMT and the country’s employment report for the month of February, scheduled for release by end of this week. The German 10-year bond yield, which move inversely to its price, hovered around -0.508 percent, the long-term 30-year yield rose 1 basis point to -0.023 percent and the yield on short-term 2-year suffered nearly 2 basis points to trade at -0.706 percent.
 

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