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Europe roundup, Sterling rebounds …

Europe roundup: Sterling rebounds from 3-week lows, Dollar index eases despite a rise in U.S. treasury yields, European shares bounce back – Monday, February 12th, 2018

Market Roundup

  • Switzerland Jan CPI yy decrease to 0.7 % (forecast 0.8 %) vs previous 0.8 %
  • Switzerland Jan CPI mm increase to -0.1 % (forecast -0.1 %)
  • Sweden Jan Reg unemployment rate decrease to 7.4 % vs previous 7.5 %
  • US Secretary of State Tillerson says commitment to defeat Islamic state is steadfast and there has been no gap between Egypt and United States
  • US Secretary of State Tillerson says trump administration remains committed to achieving lasting agreement between Israelis and Palestinians
  • Bank of England’s Vlieghe says neutral UK interest rate is also very uncertain
  • Bank of England’s Vlieghe says UK rate outlook depends on uncertain economic outlook over next few years
  • Bank of England’s Vlieghe says U.S. Fed experience of reversing QE will also influence level of rates at which BOE starts to reverse QE
  • Bank of England’s Vlieghe says BOE has discovered it can cut rates lower than 0.5 pct since it gave guidance of 2 pct threshold for reversing QE

Economic Data Preview

  • (1400 ET/1900 GMT) The U.S. reports its monthly budget statement for the month of January. The government is likely to show a budget surplus of $108.8 billion after posting a deficit of $23 billion in the previous month.

Key Events Ahead

  • (1710 ET/2110 GMT) Reserve Bank of Australia Assistant Governor Luci Ellis’ Speech.

FX Beat

DXY: The dollar index retreated from a 2-week peak hit in the previous session, as investors awaited the U.S. inflation figures later in the week. The greenback against a basket of currencies traded 0.1 percent down at 90.22, having touched a high of 90.57 on Thursday, its highest since Jan. 23. FxWirePro’s Hourly Dollar Strength Index stood at -37.76 (Neutral) by 1000 GMT.

EUR/USD: The euro gained after falling to a 3-week low in the previous session, as the greenback eased against a basket of currencies. The European currency traded 0.2 percent up at 1.2272, having touched a low of 1.2205 on Friday, its lowest since Jan. 18. FxWirePro’s Hourly Euro Strength Index stood at -63.17 (Bearish) by 1000 GMT.  Immediate resistance is located at 1.2328 (61.8% retracement of 1.2522 and 1.2205), a break above targets 1.2365 (10-DMA). On the downside, support is seen at 1.2205 (Previous Session Low), a break below could drag it lower 1.2165.

USD/JPY: The dollar declined against the Japanese yen on speculation that the U.S. CPI data for January could come in strong and trigger a renewed rise in bond yields that could dent equities and boost demand for safe-haven assets. The major was trading 0.1 percent down at 108.67, having hit a low of 108.04 on Friday, its lowest since Sept. 8. FxWirePro’s Hourly Yen Strength Index stood at 85.49 (Slightly Bullish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. monthly budget statement 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 108.00, a break below could take it lower 107.30.

GBP/USD: Sterling edged up after falling to a 3-week low in the prior session on European Union’s chief Brexit negotiator Michel Barnier warning. The major traded 0.2 percent up at 1.3855, having hit a low of 1.3764 on Friday, it’s lowest since Jan 17. FxWirePro’s Hourly Sterling Strength Index stood at -60.65 (Bearish) by 1000 GMT. Immediate resistance is located at 1.3958 (21-DMA), a break above could take it near 1.4063. On the downside, support is seen at 1.3764 (Previous Session Low), a break below targets 1.3700. Against the euro, the pound was trading flat at 88.55 pence, having hit a low of 89.10 pence on Tuesday, it’s lowest since Jan. 17.

USD/CHF: The Swiss franc rose, reversing some of its previous session losses, as the greenback weakened across the board. The major trades 0.3 percent down at 0.9365, having touched a high of 0.9469 on Thursday, it’s highest since Jan. 24. FxWirePro’s Hourly Swiss Franc Strength Index stood at 66.83 (Bullish) by 1000 GMT. On the higher side, near-term resistance is around 0.9458 (21-DMA) and any break above will take the pair to next level till 0.9500. The near-term support is around 0.9347 (10-DMA) and any close below that level will drag it till 0.9306.

Equities Recap

European shares rebounded from 6-month lows, while the greenback eased from a 2-week peak hit in the previous week, as investors braced for more volatility ahead of U.S. inflation figures later in the week.

The pan-European STOXX 600 index advanced 1.5 percent to 373.94 points, while the FTSEurofirst 300 index surged 1.5 percent to 1,466.87 points.

Britain’s FTSE 100 trades 1.2 percent higher at 7,176.21 points, while mid-cap FTSE 250 gained 0.9 percent to 19,388.60 points.

Germany’s DAX rose 1.6 percent at 12,305.19 points; France’s CAC 40 trades 1.4 percent up at 5,151.40 points.

Commodities Recap

Crude oil prices rose by 1 percent, recovering some of last week’s steep losses, despite rising production in the United States that undermined efforts led by the Organization of the Petroleum Exporting Countries and Russia to tighten markets and prop up prices. International benchmark Brent crude was trading 1.6 percent up at $63.74 per barrel by 1039 GMT, having hit a low of $61.75 the session before, its lowest since Dec. 7. U.S. West Texas Intermediate was trading 1.8 percent up at $60.24 a barrel, after falling as low as $58.06 on Friday, its weakest since Dec. 22.

Gold prices rose as the U.S. dollar slipped from a 2-week peak as investors awaited inflation data from the United States later this week for signs of the intensity of expected U.S. interest rate increases. Spot gold was 0.4 percent up at $1,321.53 per ounce, as of 1041 GMT, having hit a low of 1,306.96 on Thursday, lowest since Jan 14. U.S. gold futures for April delivery rose 0.8 percent to $1,325.60 per ounce.

Treasuries Recap

The U.S. 10-year Treasury yield jumped to 4-year high Monday even as global stock prices rebounded and as concerns over inflation continued. The yield on the benchmark 10-year Treasuries jumped 5 basis points to 2.88 percent, the super-long 30-year bond yields surged 4 basis points to 3.17 percent and the yield on the short-term 2-year traded nearly 5-1/2 basis points higher at 2.11 percent.

The UK gilts slumped as investors wait to watch the country’s consumer price inflation for the month of January, scheduled to be released on February 13 and Bank of England (BoE) member McCafferty’s speech, due to be held later today for detailed insight into the bond market. The yield on the benchmark 10-year gilts, jumped 4-1/2 basis points to 1.61 percent, the super-long 30-year bond yields surged 4 basis points to 1.98 percent and the yield on the short-term 2-year too traded 3-1/2 basis points higher at 0.69 percent.

The German bunds plunged as investors look forward to a decline in 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, jumped 2 basis points to 0.77 percent, the yield on 30-year note surged 1-1/2 basis points to 1.37 percent and the yield on short-term 2-year traded tad higher at -0.56 percent.

The New Zealand government bonds closed Monday’s session on a higher note amid 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, slipped 1 basis point to 3.01 percent, the yield on 20-year also fell 1 basis point to 3.52 percent and the yield on short-term 2-year too close a basis point lower at 1.89 percent.

The Australian bonds jumped during early Asian session at the start of the week Monday, tracking similar movement in the U.S. counterpart as investors wait to watch the former’s employment report for the month of January. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped nearly 4 basis points to 2.88 percent, the yield on the long-term 30-year note surged 4-1/2 basis points to 3.47 percent and the yield on short-term 2-year traded nearly 3-1/2 basis points higher at 2.02 percent.

Source: FXWire Media Round Ups

 

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