Europe roundup: Sterling eases following trumps’ comments, Dollar rallies as U.S. inflation heightens expectations for rate hikes, European shares advance – Friday, July 13th, 2018
- EUR/USD -0.4%, USD/JPY 0.03%, GBP/USD -0.64%, EUR/GBP 0.26%
- DXY 0.36%, DAX 0.22%, FTSE 0.48%, Brent -0.73%, Gold -0.48%
- Trump says May’s Brexit plan kills hope of a U.S. trade deal
- China’s trade surplus with US hits record as exporters rush to beat tariffs
- China fiscal policy has “ample room” to support economy – c.bank research head
- BOJ may project inflation missing its target for 3 more years – sources
- Germany Jun Wholesale Price Index MM, 0.5% f’cast, 0.8% previous
- Germany Jun Wholesale Price Index YY, 3.4% f’cast, 2.9% previous
- Oil falls towards $73 per barrel as supply concerns ease
Economic Data Preview
- (0830 ET/1230 GMT) The U.S. Labor Department publishes import and export prices index for the month of June. The import prices are likely to have gained 0.1 percent after rising 0.6 percent in May, while exports are expected to have edged up 0.2 percent after increasing 0.6 percent in the prior month.
- (1000 ET/1400 GMT) The University of Michigan is likely to report that U.S. preliminary consumer sentiment index rose to 98.2 in July, after posting a similar reading in June.
- (1300 ET/1800 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (1100 ET/1500 GMT) Federal Reserve Monetary Policy Report
- (1230 ET/1630 GMT) Atlanta Fed President Raphael Bostic participates in Town Hall chat before the Northern Chapter Virginia Society of Certified Public Accountants, in Falls Church.
DXY: The dollar index surged to a 2-week peak after upbeat U.S. consumer prices data boosted the prospects the Federal Reserve would hike interest rates as many as four times in 2018. The greenback against a basket of currencies trades 0.3 percent up at 95.14, having touched a high of 94.24, its highest since June 29. FxWirePro’s Hourly Dollar Strength Index stood at 76.72 (Slightly Bullish) by 1000 GMT.
EUR/USD: The euro slumped to an 11-day low as European Central Bank minutes published on Thursday showed that policymakers remained dovish and were far away from normalizing policy. The European currency traded 0.4 percent down at 1.1624, having touched a high of 1.1790 on Monday, its highest since June 14. FxWirePro’s Hourly Euro Strength Index stood at 28.30 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1716 (5-DMA), a break above targets 1.1801 (June 13 High),. On the downside, support is seen at 1.1591 (July 2 Low), a break below could drag it till 1.1565 (June 16 Low).
USD/JPY: The dollar rallied to a new 6-month peak near the 113.00 handle after Federal Reserve Chairman Jerome Powell stated that he believes the U.S. economy remains upbeat, with recent government tax and spending programs likely to boost gross domestic product for perhaps three years. The major was trading 0.1 percent up at 112.64, having hit a high of 112.80 earlier, its highest since Jan 10. FxWirePro’s Hourly Yen Strength Index stood at 5.54 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. import and export price indexes and Fed Monetary Policy report. Immediate resistance is located at 113.07 (Dec 19 High), a break above targets 113.38 (Dec 8 High). On the downside, support is seen at 111.91 (July 12 Low), a break below could take it lower 111.36 (5-DMA).
GBP/USD: Sterling tumbled to a 1-1/2 week low after U.S. President Donald Trump criticized Prime Minister Theresa May’s Brexit strategy, stating that it had probably slashed hope of a U.S.-British trade deal. The major traded 0.5 percent down at 1.3133, having hit a high of 1.3362 on Monday; it’s highest since June 14. FxWirePro’s Hourly Sterling Strength Index stood at -18.89 (Neutral) 1000 GMT. Immediate resistance is located at 1.3362 (June 1 High), a break above could take it near 1.3389 (June 13 High). On the downside, support is seen at 1.3095 (July 2 Low), a break below targets 1.3049 (June 28 Low). Against the euro, the pound was trading 0.3 percent down at 88.58 pence, having hit a low of 89.00 pence on Monday, it’s lowest since March 9.
USD/CHF: The Swiss franc slumped to multi-month low as the greenback rallied on expectations the Federal Reserve will hike interest rates as many as four times in 2018. The major trades 0.3 percent up at 1.0054, having touched a high of 1.0067 earlier, it’s highest since May 2017. FxWirePro’s Hourly Swiss Franc Strength Index stood at -140.54 (Highly Bullish) by 1000 GMT. On the higher side, near-term resistance is around 1.0100 and any break above will take the pair to next level till 1.0160. The near-term support is around 1.0000 and any close below that level will drag it till 0.9943.
European shares extended rally and were set for a second week of gains as optimism about the next corporate earnings season grew.
The pan-European STOXX 600 index advanced 0.2 percent at 385.03 points, while the FTSEurofirst 300 index surged 0.2 percent to 1,507.12 points.
Britain’s FTSE 100 trades 0.7 percent up at 7,683.43 points, while mid-cap FTSE 250 gained 0.5 percent to 20,884.04 points.
Germany’s DAX rose 0.2 percent at 12,518.51 points; France’s CAC 40 trades 0.4 percent higher at 5,424.67 points.
Crude oil prices slumped by more than 1 percent and were set for a second straight week of decline amid increasing hopes that Iran will still export some crude despite U.S. sanctions. International benchmark Brent crude was trading 0.7 percent down at $73.88 per barrel by 1035 GMT, having hit a low of $72.66 on Thursday, its lowest since June 18. U.S. West Texas Intermediate was trading 0.4 percent lower at $70.05 a barrel, after rising as low as $69.26 on Thursday, its lowest since June 26.
Gold prices declined as the dollar extended previous session gains after strong U.S. inflation data boosted investor sentiment. Spot gold was 0.5 percent down at $1,240.55 an ounce, as of 1039 GMT, having touched a low of $1239.09 earlier, its lowest since July 3 and was down about 0.7 percent for the week. U.S. gold futures for August delivery slipped 0.1 percent to $1,245.50 an ounce.
The 10-year U.S Treasury yield stood at 2.834 percent lower by 0.019 bps, while 5-year yield was 0.02 bps up at 2.735 percent.
The Japanese government bond prices were little changed across the board, with September 10-year futures flat at 150.92, The 20-year and 30-year JGB yields were unchanged at 0.680 percent and 0.800 percent, respectively.
The Australian government bond futures were little changed, with the three-year bond contract off 1 tick at 97.925 and the 10-year contract steady at 97.3650. The New Zealand government bonds gained, sending yields 0.7 basis points lower towards the long end of the curve.
Source: FXWire Media Round Ups