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Europe roundup: Sterling rallies on upbeat CPI, Dollar hits 5-month low against Yen on risk aversion, European shares slump – Tuesday, February 13th, 2018

Europe roundup: Sterling rallies on upbeat CPI, Dollar hits 5-month low against Yen on risk aversion, European shares slump – Tuesday, February 13th, 2018

Market Roundup

  • EUR/USD 0.46 %, USD/JPY -0.98%, GBP/USD 0.48%, EUR/GBP -0.01%
  • DXY -0.57%, DAX -0.49%, FTSE 0.01 %, Brent 0.21%, Gold 0.48%
  • Great Britain Core CPI MM Jan, -0.8%, forecast -0.9%, previous 0.3%
  • Great Britain Core CPI YY Jan, 2.7%, forecast 2.6%, previous 2.5%
  • Great Britain CPI MM Jan, -0.5%, forecast -0.6%, previous 0.4%
  • Great Britain CPI YY Jan, 3.0%, forecast 2.9%, previous 3.0%
  • Great Britain RPI MM Jan, -0.8%, forecast -0.7%, previous 0.8%
  • Great Britain RPI YY Jan, 4.0%, forecast 4.1%, previous 4.1%
  • Great Britain PPI Input Prices MM NSA Jan, 0.7%, forecast 0.7%, previous 0.1%
  • Great Britain PPI Input Prices YY NSA Jan, 4.7%, forecast 4.2%, previous 4.9%
  • Great Britain PPI Output Prices MM NSA Jan, 0.1%, forecast 0.2%, previous 0.4%
  • Great Britain PPI Output Prices YY NSA Jan, 2.8%, forecast 3.0%, previous 3.3%
  • Great Britain PPI Core Output MM NSA Jan, 0.3%, forecast 0.3%, previous 0.3%
  • Great Britain PPI Core Output YY NSA Jan, 2.2%, forecast 2.3%, previous 2.5%
  • Trump budget seeks cuts to domestic programs, Medicare, favors military and wall
  • U.S. to push for ‘reciprocal tax’ on trade partners -Trump
  • China Jan outbound investment jumps, may tip relaxation in capital controls
  • Oil prices pare gains on darker outlook for global balance
  • Gold climbs as dollar weakens ahead of U.S. inflation data

Economic Data Ahead

  • (1630 ET/2130 GMT) API reports its weekly crude oil stock.
  • (1645 ET/2145 GMT) Statistics New Zealand will release food price index for the month of January. The indicator posted a fall of 0.8 percent in the prior month.
  • (1830 ET/2330 GMT) The Faculty of Economics and Commerce Melbourne Institute will release Australia’s Westpac consumer confidence for the month of February. The index edged up 1.8 percent in January.
  • (1850 ET/2350 GMT) Japan’s Cabinet Office will release prelimiary gross domestic product for the fourth quarter. The economy grew at a pace of 0.6 percent in the previous quarter.

Key Events Ahead

  • (0800 ET/1300 GMT) Cleveland Fed President Loretta Mester speaks on the economic outlook and monetary policy at the Dayton Area Chamber of Commerce Government Affairs Breakfast, in Dayton, Ohio.
  • (1100 ET/1600 GMT) Federal Reserve Bank of New York is scheduled to release its fourth-quarter 2017 Household Debt and Credit Report in New York.

FX Beat

DXY: The dollar index slumped to a near 1-week low as investors awaited U.S. inflation data for clues on the pace of interest rate hikes.  The greenback against a basket of currencies traded 0.4 percent down at 89.72, having touched a high of 90.57 on Thursday, its highest since Jan. 23. FxWirePro’s Hourly Dollar Strength Index stood at -67.39 (Bearish) by 1000 GMT.

EUR/USD: The euro rose to a near 1-week peak, as the greenback eased as much as half a percent against a basket of currencies, reversing some of its gains of last week. The European currency traded 0.4 percent up at 1.2342, having touched a low of 1.2205 on Friday, its lowest since Jan. 18. FxWirePro’s Hourly Euro Strength Index stood at -24.30 (Neutral) by 1000 GMT. Immediate resistance is located at 1.2365 (50.0% retracement of 1.2522 and 1.2205), a break above targets 1.2405. On the downside, support is seen at 1.2245 (Feb 7 Low), a break below could drag it lower 1.2205 (Feb. 9 Low).

USD/JPY: The dollar slumped to a 5-month low against the Japanese yen, as a sharp sell-off in stock markets drove traders seeking safety in safe-haven assets.   The major was trading 1.0 percent down at 107.59, having hit a low of 107.42, its lowest since Sept. 8. FxWirePro’s Hourly Yen Strength Index stood at 113.18 (Highly Bullish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the FOMC member Mester’s speech for further momentum. Immediate resistance is located at 109.37 (61.8% retracement of 111.48 and 108.04), a break above targets 110.28. On the downside, support is seen at 107.40, a break below could take it lower 107.00.

GBP/USD: Sterling rose above the 1.3900 handle after data showed British inflation unexpectedly stayed close to its highest levels in six years in January. The economy’s consumer price inflation held at an annual rate of 3.0 percent, unchanged from the month before, while house prices in December rose by 5.2 percent annually as compared with 5.0 percent in November. The major traded 0.5 percent up at 1.3907, having hit a low of 1.3764 on Friday, it’s lowest since Jan 17. FxWirePro’s Hourly Sterling Strength Index stood at 27.04 (Neutral) by 1000 GMT.  Immediate resistance is located at 1.3991 (21-DMA), a break above could take it near 1.4063. On the downside, support is seen at 1.3764 (Feb 9 Low), a break below targets 1.3700. Against the euro, the pound was trading 0.1 percent up at 88.74 pence, having hit a low of 88.87 pence earlier, it’s lowest since Feb. 7.

USD/CHF: The Swiss franc advanced to a 1-week high as investors rushed into safe-haven assets amid weaker trading sentiment. The major trades 0.6 percent down at 0.9335, having touched a high of 0.9469 on Thursday, it’s highest since Jan. 24. FxWirePro’s Hourly Swiss Franc Strength Index stood at 43.36 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 0.9445 (21-DMA) and any break above will take the pair to next level till 0.9500. The near-term support is around 0.9306 and any close below that level will drag it till 0.9256.

Equities Recap

European shares slumped following a flurry of mixed corporate results, while the greenback slumped to a near 1-week low as investors awaited U.S. inflation data.

The pan-European STOXX 600 index dropped 1.2 percent to 372.23 points, while the FTSEurofirst 300 index slumped 0.3 percent to 1,459.49 points.

Britain’s FTSE 100 trades 0.1 percent lower at 7,170.93 points, while mid-cap FTSE 250 fell 0.2 percent to 19,349.72 points.

Germany’s DAX declined 0.2 percent at 12,260.42 points; France’s CAC 40 trades 0.2 percent down at 5,129.33 points.

Commodities Recap

Crude oil prices declined, despite a rebound in global stock markets and a weaker dollar which potentially supports more fuel consumption. International benchmark Brent crude was trading 0.05 percent down at $62.65 per barrel by 1031 GMT, having hit a low of $61.75 on Friday, its lowest since Dec. 7. U.S. West Texas Intermediate was trading 0.1 percent down at $59.29 a barrel, after falling as low as $58.06 on Friday, its weakest since Dec. 22.

Gold prices rallied to a near one-week high, boosted by a weaker dollar, while investors awaited U.S. inflation data for clues on the pace of interest rate hikes. Spot gold was 0.5 percent up at $1,329.09 by 1033 GMT, having hit a low of 1,306.96 on Thursday, lowest since Jan 14. U.S. gold futures were up 0.3 percent at $1,330 per ounce.

Treasuries Recap

The U.S. Treasuries jumped in what looks set to be another relatively uneventful day for major economic news in the US, with the only data release of note being the NFIB small business sentiment survey. The yield on the benchmark 10-year Treasuries plunged 2-1/2 basis points to 2.82 percent, the super-long 30-year bond yields slumped nearly 2 basis points to 3.11 percent and the yield on the short-term 2-year traded nearly 1-1/2 basis points lower at 2.06 percent.

The UK gilts traded slightly on the downside after the country’s consumer price inflation came in higher than expected in January, adding further pressure for policymakers to hike interest rates again, possibly as soon as May. The yield on the benchmark 10-year gilts, hovered around 1.60 percent, the super-long 30-year bond yields climbed tad up at 1.98 percent while the yield on the short-term 2-year slumped nearly 2 basis points to 0.70 percent.

The German bunds surged as investors await the country’s fourth-quarter gross domestic product (GDP), scheduled to be released on February 14 by 07:00GMT. The German 10-year bond yields, which move inversely to its price, slumped 3 basis points to 0.72 percent, the yield on 30-year note plunged 2-1/2 basis points to 1.33 percent and the yield on short-term 2-year traded 1 basis point lower at -0.58 percent.

The New Zealand government bonds closed Tuesday’s session on a higher note as demand for safe-haven instruments continued amid mild recovery in equities in a muted trading week that is scheduled to witness data of least economic significance. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 2-1/2 basis points to 2.99 percent, the yield on 20-year also plunged 2-1/2 basis points to 3.51 percent and the yield on short-term 2-year closed 2 basis points lower at 1.88 percent.

The Japanese government bonds remained tad higher, following expectations of a decline in the country’s fourth-quarter gross domestic product (GDP), scheduled to be released today by 23:50GMT. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1/2 basis point to 0.06 percent, the yield on the long-term 30-year note fell nearly 1 basis point to 0.80 percent and the yield on short-term 2-year remained tad lower at -0.14 percent.

The Australian bonds sharply rallied during early Asian session as investors covered previous short positions ahead of the employment report for the month of January, scheduled to be released on February 15. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 2-1/2 basis points to 2.86 percent, the yield on the long-term 30-year note fell nearly 1-1/2 basis points to 3.51 percent and the yield on short-term 2-year traded nearly 1-1/2 basis points lower at 2.00 percent.

Source: FXWire Media Round Ups

 

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