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Home » Blogs » Europe roundup: Sterling eases as investors eye UK cabinet reshuffle, Euro off highs on profit-taking, European shares hit over 2-year peak – Monday, January 8th, 2018
U.S. dollar and Euro notes are seen in this November 7, 2016 picture illustration. Picture taken November 7. REUTERS/Dado Ruvic/Illustration

Europe roundup: Sterling eases as investors eye UK cabinet reshuffle, Euro off highs on profit-taking, European shares hit over 2-year peak – Monday, January 8th, 2018

Europe roundup: Sterling eases as investors eye UK cabinet reshuffle, Euro off highs on profit-taking, European shares hit over 2-year peak – Monday, January 8th, 2018

Market Roundup

  • EUR/USD -0.22%, USD/JPY 0.04%, GBP/USD -0.16%, EUR/GBP -0.06%
  • DXY 0.24%, DAX 0.37%, FTSE -0.04%, Brent 0.25%, Gold Flat
  • DXY breaks recent 92.261 range high: close now key
  • EZ Consumer Confidence Final Dec, 0.5, 0.5 forecast, 0.5 previous
  • EZ Business Climate Dec, 1.66, 1.51 forecast, 1.49 previous
  • EZ Economic Sentiment Dec, 116.0, 114.8 forecast, 114.6 previous
  • EZ Industrial Sentiment Dec, 9.1, 8.4 forecast, 8.2 previous
  • EZ Services Sentiment Dec, 18.4, 16.5 forecast, 16.3 previous
  • EZ Sentix Index Jan, 32.9, 31.5 forecast, 31.1 previous
  • EZ Retail Sales Nov, 2.8%, 2.2% forecast, 0.4% previous
  • Germany Industrial Orders MM Nov, -0.4%, 0.5% forecast, 0.5% previous
  • Great Britain Halifax House Prices MM Dec, -0.6%, 0.2% forecast, 0.5% previous
  • Great Britain Halifax House Prices 3M/YY Dec, 2.7%, 3.3% forecast, 3.9% previous
  • Oil stable on lower U.S. rig count, but below recent high
  • Gold dips as dollar firms on U.S. rate hike views

Economic Data Ahead

  • (1030 ET/1530 GMT) The Bank of Canada releases Business Outlook Survey.
  • (1500 ET/2000 GMT) The U.S. Federal Reserve is likely to report that consumer credit declined to $19.50 billion in November from $20.52 billion the month before.

Key Events Ahead

  • (1245 ET/1645 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $1.455 bn)
  • (1240 ET/1740 GMT) Federal Reserve Bank of Atlanta President Raphael Bostic speaks on the economic outlook and monetary policy before the Rotary Club of Atlanta, in Atlanta.
  • (1335 ET/1835 GMT) San Francisco Fed President John Williams participates in a panel, “The Options: Keep It, Tweak It, or Replace It” before the Brookings Institution event, “Should the Fed Stick with the 2-Percent Inflation Target or Rethink It?”, in Washington.
  • (1625 ET/2125 GMT) Boston Fed boss Eric Rosengren participates in the final discussion, “Next steps: Learning from the Bank of Canada” in Washington.

FX Beat

DXY: The dollar index rose to a 1-week high as traders continued to bet the Fed would raise interest rates two times this year, including a probable increase in March. The greenback against a basket of currencies traded 0.1 percent up at 92.16, having touched a high of 92.29 earlier, its highest since Jan. 1. FxWirePro’s Hourly Dollar Strength Index stood at 68.65 (Bullish) by 1000 GMT.

EUR/USD: The euro declined to an over 1-week low as investors took profits after a recent rally, however, markets remained optimistic about the outlook for the European currency following soft U.S. jobs data. The major traded 0.3 percent down at 1.1989, having touched a low of 1.1982 earlier, its lowest since Dec. 29. FxWirePro’s Hourly Euro Strength Index stood at -97.43 (Slightly Bearish) by 1000 GMT. Immediate resistance is located at 1.2090, a break above targets 1.2130. On the downside, support is seen at 1.1973 (10-DMA), a break below could drag it lower 1.1936 (Dec. 26).

USD/JPY: The dollar rallied to a 2-week peak, in response to positive U.S. Treasury yields, as markets cheered an uptick in the U.S. wages. The major was trading 0.1 percent up at 113.15, having hit a high of 113.38 earlier, its highest since Dec. 22. FxWirePro’s Hourly Yen Strength Index stood at 15.10 (Neutral) by 1000 GMT.  Immediate resistance is located at 113.63 (Dec. 21), a break above targets 114.00. On the downside, support is seen at 112.93 (21-DMA), a break below could take it near 112.17 (Jan. 3 Low).

GBP/USD: Sterling eased after Prime Minister Theresa May said on Sunday that she would soon announce changes to her ministerial team. The major traded 0.3 percent down at 1.3527, having hit a high of 1.3612 on Wednesday; it’s highest since Sept. 20. FxWirePro’s Hourly Sterling Strength Index stood at -69.64 (Bearish) by 1000 GMT. Immediate resistance is located at 1.3590, a break above could take it near 1.3640. On the downside, support is seen at 1.3479 (10-DMA), a break below targets 1.3428 (21-DMA).  Against the euro, the pound was trading flat at 88.66 pence, having hit a high of 88.48 pence on Wednesday, it’s highest since Dec. 22.

USD/CHF: The Swiss franc slumped, extending previous session losses, as the greenback rose on the back of rising U.S. Treasury yields. The major trades 0.3 percent up at 0.9772, having touched a low of 0.9699 on Tuesday, it’s lowest since Jan. 2. FxWirePro’s Hourly Swiss Franc Strength Index stood at -130.46 (Highly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 0.9800 and any break above will take the pair to next level till 0.9865/0.9900/0.9970 (Dec 8th, 2017 high)/1.000. The near-term support is around 0.9705 and any close below that level will drag it to next level till 0.9635/0.9600.

AUD/USD: The Australian dollar dropped as prevailing positive tone around the U.S. Treasury bond yields underpinned the U.S. dollar demand.  The Aussie trades 0.2 percent down at 0.7841, having hit a high of 0.7874 on Friday; it’s highest since Oct. 20. FxWirePro’s Hourly Aussie Strength Index stood at 46.85 (Neutral) by 1000 GMT. Immediate support is seen at 0.7814 (Jan 4 Low), a break below targets 0.7765 (Dec. 28 Low). On the upside, resistance is located at 0.7880, a break above could take it near 0.7940.

Equities Recap

European stocks touched their highest level in more than two years in early deals, while the greenback rallied to 1-week peak as comments by some Fed officials over the weekend suggested the U.S. central bank remained on track to raise interest rates in 2018.

The pan-European STOXX 600 index advanced 0.3 percent to 398.35 points, while the FTSEurofirst 300 index rallied 0.2 percent to 1,565.15 points.

Britain’s FTSE 100 trades 0.05 percent lower at 7,721.59 points, while mid-cap FTSE 250 gained 0.05 percent to 20,939.89 points.

Germany’s DAX rose 0.5 percent at 13,384.82 points; France’s CAC 40 trades 0.3 percent up at 5,488.80 points.

Commodities Recap

Crude oil prices declined, despite a slight fall in the number of U.S. rigs drilling for new production. International benchmark Brent crude was trading 0.1 percent down at $67.55 per barrel by 0928 GMT, having hit a high of $68.25 on Thursday, its highest since May 2015. U.S. West Texas Intermediate was trading 0.1 percent lower at $61.47 a barrel, after rising as high as $62.18 on Thursday, its highest since May 2015.

Gold prices tumbled as the dollar firmed on expectations of further U.S. interest rate hikes this year. Spot gold was 0.3 percent down at $1,316.33 an ounce at 0931 GMT, having touched its highest since Sept. 15 at $1,325.79 on Thursday. U.S. gold futures slipped 0.3 percent on Monday at $1,318.80 an ounce.

Treasuries Recap

The U.S. Treasuries continued into flat mode ahead of a host of FOMC members’ speeches through the day, including that of Bostic, Williams and Rosengren. The yield on the benchmark 10-year Treasuries hovered around 2.47 percent, the super-long 30-year bond yields nearly flat at 2.80 percent and the yield on the short-term 2-year steadied at 1.96 percent.

The UK gilts traded sideways ahead of the country’s 10-year auction, scheduled to be held on January 9 at 10:45GMT in an otherwise nearly silent week. The yield on the benchmark 10-year gilts, rose nearly 1 basis point to 1.25 percent, the super-long 30-year bond yields nearly flat at 1.79 percent and the yield on the short-term 2-year hovered around 0.050 percent.

The German bunds eased gains after the eurozone’s retail sales for the month of November beat market expectations, also reversing losses incurred during the month of October. The German 10-year bond yields, which move inversely to its price, fell nearly 1-1/2 basis points to 0.42 percent, the yield on 30-year note slid nearly 1 basis point to 1.26 percent and the yield on short-term 2-year traded nearly flat at -0.62 percent.

The New Zealand government bonds ended the first trading day of the week on a mixed note as investors remained side-lined in any major trading activity amid a muted week that is scheduled to witness data of minor economic significance. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 4-1/2 basis points to 2.83 percent, the yield on 20-year slipped 1-1/2 basis points to 3.27 percent and the yield on short-term 2-year ended 1 basis point lower at 1.97 percent.

The Japanese markets remain closed today on account of Coming of Age (Adults’) Day.

The Australian government bonds traded narrowly mixed as investors remain sidelined in any major trading activity amid a silent session that witnessed no data of major economic significance. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1/2 basis point to 2.624 percent, the yield on the long-term 30-year note also climbed 1/2 basis point to 3.324 percent and the yield on short-term 2-year fell 1/2 basis point to 1.987 percent.

Source: FXWire Media Round Ups

 

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