Europe roundup: Sterling eases on downbeat service PMI, Dollar index steadies on FED rate hike expectations, European shares trade in red – Monday, February 5th, 2018
- Eurozone Dec retail sales yy decrease to 1.9 % (forecast 1.9 %) vs previous 2.8 %
- Eurozone Dec retail sales mm decrease to -1.1 % (forecast -1 %) vs previous 1.5 %
- Eurozone Feb Sentix index decrease to 31.9 (forecast 33) vs previous 32.9
- United Kingdom Jan Markit/CIPS service PMI decrease to 53 (forecast 54.3) vs previous 54.2
- Eurozone Jan Markit composite final PMI increase to 58.8 (forecast 58.6) vs previous 58.6
- Eurozone Jan Markit services final PMI increase to 58 (forecast 57.6) vs previous 57.6
- Germany Jan Markit composite final PMI increase to 59 (forecast 58.8) vs previous 58.8
- Germany Jan Markit services PMI increase to 57.3 (forecast 57) vs previous 57
- France Jan Markit composite PMI decrease to 59.6 (forecast 59.7) vs previous 59.7
- France Jan Markit services PMI decrease to 59.2 (forecast 59.3) vs previous 59.3
- Italy Jan Markit/ADACI services PMI increase to 57.7 (forecast 56) vs previous 55.4
- Spain Jan services PMI increase to 56.9 (forecast 55.4) vs previous 54.6
Economic Data Ahead
- (0945 ET/1445 GMT) Financial firm Markit releases final U.S. composite PMI for the month of January. The index posted a final reading of 53.8 in the previous month.
- (0945 ET/1445 GMT) Markit Economics reports final U.S. services PMI for the month of January. The index posted a final reading of 53.3 in December.
- (1000 ET/1500 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. non-manufacturing Purchasing Managers’ index rose to a final reading of 56.5 in January from 56.0 in December.
- N/A The Federal Reserve releases its Loan Officer Survey.
Key Events Ahead
- (1100 ET/1600 GMT) European Central Bank (ECB) President Mario Draghi’s Speech.
DXY: The dollar index held previous session gains as upbeat U.S. jobs data increased the chances of more U.S. interest rate hikes this year. The greenback against a basket of currencies traded flat at 89.16, having touched a high of 89.43 last week, its highest since Jan. 30. FxWirePro’s Hourly Dollar Strength Index stood at 48.41 (Neutral) by 1000 GMT.
EUR/USD: The euro edged up after data showed Eurozone businesses started 2018 by increasing activity faster than at any time in over a decade. The economy’s Markit’s Final Composite Purchasing Managers’ Index rose to 58.8 in January from December’s 58.1 and up from the preliminary estimate of 58.6. The European currency traded 0.1 percent up at 1.2470, having touched a low of 1.2336 on Tuesday, its lowest since Jan. 24. FxWirePro’s Hourly Euro Strength Index stood at 80.20 (Slightly Bullish) by 1000 GMT. Immediate resistance is located at 1.2530, a break above targets 1.2590. On the downside, support is seen at 1.2351 (50.0% retracement of 1.2264 and 1.2537), a break below could drag it lower 1.2307 (38.2% retracement).
USD/JPY: The dollar declined as a weaker trading sentiment around equity markets underpinned the Japanese Yen’s safe-haven demand, however, expectations for a pickup in the U.S. inflationary pressure and Fed rate-hike prospects limited the downside. The major was trading 0.3 percent down at 109.82, having hit a high of 110.48 on Friday, its highest since Jan. 23. FxWirePro’s Hourly Yen Strength Index stood at -94.93 (Slightly Bullish) by 1000 GMT. Immediate resistance is located at 110.48 (Previous Session High), a break above targets 111.17. On the downside, support is seen at 109.28 (5-DMA), a break below could take it lower 109.00.
GBP/USD: Sterling eased on news that Britain had ruled out being in a customs union with the European Union after Brexit. Moreover, data showing Britain’s services PMI dropped to 53.0 in January at a 16-month low from 54.2 in December weighed heavily on the British Pound. The major traded flat at 1.4111, having hit a high of 1.4278 on Friday, it’s highest since Jan 26. FxWirePro’s Hourly Sterling Strength Index stood at -94.93 (Slightly Bearish) by 1000 GMT. Immediate resistance is located at 1.4233, a break above could take it near 1.4280. On the downside, support is seen at 1.4025, a break below targets 1.3979. Against the euro, the pound was trading 0.1 percent down at 88.32 pence, having hit a low of 88.36 pence earlier, it’s lowest since Jan. 19.
USD/CHF: The Swiss franc gained, hovering towards a 2-1/2 year high hit on Friday, as a weaker trading sentiment around equity markets underpinned the safe-haven assets. The major trades flat at 0.9305, having touched a low of 0.9255 the prior session, it’s lowest since August. 2015. FxWirePro’s Hourly Swiss Franc Strength Index stood at 53.21 (Bullish) by 1000 GMT. On the higher side, near-term resistance is around 0.9346 (78.6% retracement of 0.9666 and 0.9255) and any break above will take the pair to next level till 0.9415 (68.1% retracement). The near-term support is around 0.9230 and any close below that level will drag it till 0.9200.
European shares declined, following a sharp sell-off in the Asian market, while the greenback steadied against a basket of currencies after the U.S. payrolls report showed wages grew at their fastest pace in more than 8-1/2 years.
The pan-European STOXX 600 index slumped 0.9 percent to 384.26 points, while the FTSEurofirst 300 index edged down 0.9 percent to 1,529.05 points.
Britain’s FTSE 100 trades 1.1 percent lower at 7,362.37 points, while mid-cap FTSE 250 eased 1.3 percent to 19,712.44 points.
Germany’s DAX fell 0.6 percent at 12,712.77 points; France’s CAC 40 trades 0.9 percent down at 5,315.93 points.
Crude oil prices slumped to multi-week lows amid a wider market sell-off and a stronger dollar. International benchmark Brent crude was trading 0.1 percent down at $68.21 per barrel by 1011 GMT, having hit a low of $67.68 earlier, its lowest since Jan. 9. U.S. West Texas Intermediate was trading 0.4 percent up at $65.31 a barrel, after falling as low as $63.64 on Thursday, its weakest since Jan. 22.
Gold prices rose after falling to a 2-week low in the previous session on robust U.S. jobs data that increased the chances of more interest rate hikes this year. Spot gold was 0.4 percent up at $1,336.09 per ounce by 1015 GMT, having hit a low of 1,327.36 on Friday, lowest since Jan 19. U.S. gold futures were steady at $1,337 per ounce.
The U.S. Treasuries traded mixed ahead of today’s ISM non-manufacturing PMI for the month of January, due at 15:00GMT, followed tomorrow by the December full trade and JOLTS reports. The yield on the benchmark 10-year Treasuries traded tad lower at 2.85 percent, the super-long 30-year bond yields surged 1-1/2 basis points to 3.10 percent and the yield on the short-term 2-year traded 1-1/2 basis points lower at 2.13 percent.
The UK gilts gained after the country’s services PMI for the month of January disappointed market expectations, thus pushing debt prices higher. The yield on the benchmark 10-year gilts, slumped 2 basis points to 1.56 percent, the super-long 30-year bond yields slipped a little over 1/2 basis point to 1.95 percent and the yield on the short-term 2-year traded 1 basis point lower at 0.65 percent.
The German bunds jumped as investors have largely shrugged-off the country’s higher-than-expected composite and services PMI ahead of European Central Bank President Mario Draghi’s speech, scheduled to be held today by 16:00GMT. The German 10-year bond yields, which move inversely to its price, slumped 2 basis points to 0.73 percent, the yield on 30-year note tad lower at 1.39 percent and the yield on short-term 2-year traded nearly 1-1/2 basis points lower at -0.55 percent.
The New Zealand government bonds ended Monday’s session on a mixed tone as investors wait to watch the Reserve Bank of New Zealand’s (RBNZ) monetary policy decision, scheduled to be unveiled on February 7 by 20:00GMT, followed by the policy statement and Governor Spencer’s speech at 21:00GMT. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.99 percent, the yield on 20-year also slipped 1 basis point to 3.52 percent while the yield on short-term 2-year ended 1 basis point higher at 1.95 percent.
The Australian government bonds suffered at the start of the trading week on hopes of a fall in the country’s retail sales for the month of December, scheduled to be released on February 6 by 00:30GMT. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, remained tad higher at 2.90 percent, the yield on the long-term 30-year note hovered around 3.52 percent and the yield on short-term 2-year traded 1/2 basis point higher at 2.06 percent.
Source: FXWire Media Round Ups