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Europe roundup: Sterling off highs ahead of EU summit next week, Dollar index rebounds on FED rate hike expectations, European shares bounce – Friday, October 12th, 2018

Europe roundup: Sterling off highs ahead of EU summit next week, Dollar index rebounds on FED rate hike expectations, European shares bounce – Friday, October 12th, 2018

Market Roundup

  • EUR/USD -0.12%, USD/JPY 0.12%, GBP/USD -0.16%, EUR/GBP 0.06%
  • DXY 0.11%, DAX 0.52%, FTSE 0.7%, Brent 0.44%, Gold -0.32%
  • U.S.-China trade talks must cover currency, U.S. Treasury chief says
  • EZ Industrial Production (y/y), 0.9%, -0.2% forecast, -0.1% previous
  • As Brexit talks progress, UK PM May struggles to find support at home
  • Germany CPI Final (y/y), 2.3%, 2.3% forecast, 2.3% previous
  • Germany HICP Final (y/y), 2.2%, 2.2% forecast, 2.2% previous
  • ‘Winter is coming’: Indonesia warns of new crisis from trade war
  • G20 fails to mend trade rift, chair urges protagonists to resolve disputes
  • ECB feels vindicated but risks gaining prominence: Draghi
  • Sterling slips before EU summit next week

Economic Data Ahead

  • (0830 ET/1230 GMT) The U.S. Labor Department publishes the import and export prices index for the month of September. The import prices are likely to have gained 0.2 percent after falling 0.6 percent in August, while exports are expected to have edged up 0.2 percent after declining 0.1 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 100.4 in October, after posting a final reading of 100.1 in September.
  • (0900 ET/1400 GMT) Mexico will release its industrial output data for the month of August. The economy’s industrial production rose 0.2 percent in July, while on a year-over-year basis it increased to 1.3 percent.
  • (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.

Key Events Ahead

  • (0930 ET/1330 GMT) Federal Reserve Bank of Chicago President Charles Evans speaks at Ann Arbor, Michigan
  • (1000 ET/1400 GMT) Bank of England Executive Director Andy Haldane speaks at King’s College London event in London
  • (1145 ET/1545 GMT) Federal Reserve Bank of Chicago President Charles Evans participates in moderated conversation in Ann Arbor, Michigan.
  • (2230 ET/0230 GMT) Federal Reserve Vice Chair for Supervision Randal Quarles participates in a discussion before the Institute of International Finance Annual Membership Meeting.

FX Beat

DXY: The dollar rebounded from a 2-week low on the back of expectations of gradual interest rate hikes by the Federal Reserve. The greenback against a basket of currencies trades 0.05 percent up at 95.08, having touched a low of 94.95 earlier, its lowest since Sept. 28. FxWirePro’s Hourly Dollar Strength Index stood at -50.08 (Bearish) by 1000 GMT.

EUR/USD: The euro slumped from a near 2-week peak hit earlier in the day after Economy Minister Peter Altmaier stated that the German economy is losing momentum as rising trade tensions abroad and a lack of skilled workers at home limit the growth prospects. The European currency traded 0.1 percent down at 1.1583, having touched a high of 1.1610 earlier, its highest since October 1. FxWirePro’s Hourly Euro Strength Index stood at 77.21 (Bullish) by 1000 GMT. Immediate resistance is located at 1.1651 (September 28 High), a break above targets 1.1698 (September 17 High). On the downside, support is seen at 1.1563 (October 1 Low), a break below could drag it till 1.1522 (5-DMA).

USD/JPY: The dollar steadied after falling for six straight sessions, as investor risk sentiment improved following a recovery in the global shares from a brutal selloff. The major was trading 0.1 percent up at 112.25, having hit a low of 111.83 on Thursday, its lowest since September 18. FxWirePro’s Hourly Yen Strength Index stood at -37.12 (Neutral) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. import and export price index, monthly budget statement, and Fed officials’ speeches. Immediate resistance is located at 112.58 (September 20 High), a break above targets 112.98 (September 25 High). On the downside, support is seen at 111.75 (September 14 Low), a break below could take it lower 111.35 (September 5 Low).

GBP/USD: Sterling edged down after rising to a 3-week peak earlier in the day, but was poised for a second straight week of gains on growing optimism about a Brexit deal at a European Union Summit next week. The major traded 0.1 percent down at 1.3220, having hit a high of 1.3257 earlier; it’s highest since September 21. FxWirePro’s Hourly Sterling Strength Index stood at 30.00 (Neutral) 0500 GMT. Immediate resistance is located at 1.3276 (September 21 High), a break above could take it near 1.3300. On the downside, support is seen at 1.3153 (5-DMA), a break below targets 1.3108 (21-DMA). Against the euro, the pound was trading 0.1 down at 87.64 pence, having hit a high of 87.23 on Wednesday, it’s highest since June 21.

USD/CHF: The Swiss franc retreated from a 1-week peak hit the prior day as the greenback nudged up from recent lows. The major trades 0.1 percent up at 0.9908, having touched a low of 0.9856 on Thursday, it’s lowest since October 3. FxWirePro’s Hourly Swiss Franc Strength Index stood at -94.92 (Slightly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 0.9984 (August 6 High) and any break above will take the pair to next level till 1.0010 (July 20 High). The near-term support is around 0.9842 (August 21 Low) and any close below that level will drag it till 0.9800.

Equities Recap

European shares bounced back, boosted by gains in tech and auto stocks, while the greenback surged on expectations the Federal Reserve’s interest rates will soon rise further.

The pan-European STOXX 600 index gained 0.4 percent at 361.44 points, while the FTSEurofirst 300 index rallied 0.6 percent to 1,422.40 points.

Britain’s FTSE 100 trades 0.8 percent down at 7,063.82 points, while mid-cap FTSE 250 surged 1.4 percent to 19,092.50 points.

Germany’s DAX rose 0.3 percent at 11,575.80 points; France’s CAC 40 trades 0.4 percent higher at 5,126.60 points.

Commodities Recap

Crude oil prices rebounded after two days of declines, however, was still heading for its first weekly decline in five weeks, weighed down by a huge rise in U.S. inventories and fading concerns that looming U.S. sanctions on Iran will cut supplies significantly. International benchmark Brent crude was trading 0.2 percent up at $80.46 per barrel by 1043 GMT, having hit a low of $79.78 the day before, its lowest since September 24. U.S. West Texas Intermediate was trading 0.7 percent up at $71.44 a barrel, after falling as low as $70.54 on Thursday, its lowest since September 21.

Gold prices declined, drifting away from more than 2-month highs touched in the previous session, as global equity markets recovered from deep losses. Spot gold was down 0.3 percent at $1,220.57 an ounce by 1046 GMT, having hit a high of $1226.19 on Thursday, its highest since July 31 and has risen about 1.5 percent this week, on track for its biggest weekly gain in seven.

Treasuries Recap

The U.S. Treasuries continued to plunge Friday despite a lower-than-expected CPI report, released late yesterday. The yield on the benchmark 10-year Treasuries jumped 3-1/2 basis points to 3.167 percent, the super-long 30-year bond yields also surged nearly 3-1/2 basis points to 3.338 percent and the yield on the short-term 2-year traded 3 basis points higher at 2.869 percent.

The German bunds remained mixed on the last trading day of the week after the country’s consumer price inflation (CPI) for the month of September remained unchanged and eurozone’s industrial production for August beat market expectations. The German 10-year bond yields, which move inversely to its price, rose 1 basis point to 0.529 percent, the yield on 30-year note also climbed 1 basis point to 1.148 percent while the yield on short-term 2-year traded nearly 1 basis point lower at -0.573 percent.

The Japanese government bonds remained tad lower towards the end of Asian session amid a muted trading day that witnessed data of little economic significance after investors’ risk sentiments improved slightly, with the Nikkei 225 trading range-bound following yesterday’s losses. The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained tad higher at 0.146 percent, the yield on the long-term 30-year note hovered around 0.907 percent and the yield on short-term 2-year too traded 1/2 basis point higher at -0.114 percent.

The Australian government bonds gained across the curve during Asian session after global stocks slide to 3-month low, with the S&P500 stock index tumbling over 3 percent to its biggest one-day fall since February. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell over 3 basis points to 2.730 percent, the yield on the long-term 30-year bond also plunged 3 basis points to 3.207 percent and the yield on short-term 2-year down 1-1/2 basis points to 2.028 percent.

Source: FXWire Media Round Ups

 

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