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Home » Blogs » Europe roundup: Sterling rebounds from 7-month low following BOE Monetary Policy Committee rate vote surprise, Euro slumps to 11-month low on ECB villeroy’s comments, European shares tumble – Thursday, June 21st, 2018

Europe roundup: Sterling rebounds from 7-month low following BOE Monetary Policy Committee rate vote surprise, Euro slumps to 11-month low on ECB villeroy’s comments, European shares tumble – Thursday, June 21st, 2018

Europe roundup: Sterling rebounds from 7-month low following BOE Monetary Policy Committee rate vote surprise, Euro slumps to 11-month low on ECB villeroy’s comments, European shares tumble – Thursday, June 21st, 2018

 

Market Roundup

  • EUR/USD -0.42%, USD/JPY 0.02%, GBP/USD -0.47%, EUR/GBP flat
  • DXY 0.43%, DAX -1%, FTSE flat, Brent -1.63%, Gold -0.36%
  • Eurosceptics to head Italian parliamentary finance committees
  • France Business Climate Mfg, 110, 108 forecast, 109 previous
  • Great Britain PSNB Ex Banks GBP, 4.96 bln, 6.25 bln forecast, 7.84 bln previous
  • Great Britain PSNB, GBP, 3.356 bln, 5 bln forecast, 6.23 bln previous
  • Great Britain PSNCR, GBP, 4.507 bln, -9.710 bln previous
  • Washington’s ‘capricious’ trade actions will hurt US workers, China warns
  • ECB confident on inflation outlook despite risks – Villeroy
  • OPEC strives for oil deal as Iran insists on modest rise in output
  • BOJ’s Funo urges continued easing as inflation still weak
  • U.S. identifies N.Korea missile test site it says Kim committed to destroy
  • Gold hits 6-month low as investors sell, dollar climbs
  • Oil falls 2 pct as OPEC nears deal to raise production

Economic Data Ahead

  • (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 2,000 to a seasonally adjusted 220,000 for the week ended June 15, while continuing claims for the week ended June 8 is expected to rise to 1.730 million from a previous reading of 1.697 million.
  • (0830 ET/1230 GMT) Philadelphia Federal Reserve manufacturing survey is likely to show that business activity decreased to 29.0 in June from 34.4 in May.
  • (0830 ET/1230 GMT) Payrolls processor ADP releases Canada employment report for the month of May. The report showed that the economy added 30,200 jobs in April.
  • (0830 ET/1230 GMT) Statistics Canada will release its wholesale trade figures for the month of April. The indicator is likely to have increased by 0.5 percent, after unexpectedly rising 1.1 percent in March.
  • (0900 ET/1300 GMT) Federal Housing Finance Agency’s Housing Price Index is likely to have edged up to 0.3 percent in April from a reading of 0.1percent in March.
  • (1000 ET/1400 GMT) The European Commission releases Eurozone’s preliminary Consumer Confidence reading for the month of June. The index is expected to remain unchanged after posting a rise of 0.2 in the prior month.
  • (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending June 15.

Key Events Ahead

  • (0845 ET/1245 GMT) ECB’s Daniele Nouy speaks at De Nederlandsche Bank conference – Amsterdam
  • (0900 ET/1300 GMT) Federal Reserve Bank of Minneapolis President Neel Kashkari participates in the African Development Center June 2018 Commerce and Community Conversation, in Minneapolis.
  • (1100 ET/1500 GMT) Finance ministers of EZ countries meet to decide possible new debt relief measures for Greece – Luxembourg City
  • (1115 ET/1515 GMT) Panel discussion with Deutsche Claudia Buch at Bank of France and Bundesbank joint conference – Paris
  • (1230 ET/1630 GMT) Polish central bank governor Adam Glapinski speaks on economic situaion in Poland – Brussels
  • (1400 ET/1800 GMT) British Finance Minister Philip Hammond and BoE’s Mark Carney make their annual Mansion House speeches – London
  • (1615 ET/2015GMT) BoE’s Mark Carney speaks at Lord Mayor’s Bankers and Merchants Dinner – London
  • N/A ECB’s Mario Draghi and Benoit Coeure participate in Eurogroup meeting – Luxembourg City

FX Beat

DXY: The dollar index surged to an 11-month peak after Federal Reserve Chairman Jerome Powell said that the U.S. central bank should continue with a gradual pace of rate hikes. The greenback against a basket of currencies trades 0.2 percent up at 95.12, having touched a high of 95.53, its highest since July 2017. FxWirePro’s Hourly Dollar Strength Index stood at 86.87 (Slightly Bullish) by 1000 GMT.

EUR/USD: The euro slumped to a fresh 11-month low after European Central Bank policymaker Francois Villeroy de Galhau stated that the central bank is confident inflation is on the right course, however, the specter of protectionism and other risks including Brexit added to broader economic uncertainty. The European currency traded 0.4 percent down at 1.1519, having touched a low of 1.1508, its lowest since July 2017. FxWirePro’s Hourly Euro Strength Index stood at -27.09 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1600, a break above targets 1.1644 (June 19 High). On the downside, support is seen at 1.1500, a break below could drag it till 1.1434 (July 2017 Low).

USD/JPY: The dollar trimmed gains after rising to 6-day high earlier in the day, after China’s commerce ministry accused the United States of being unstable over bilateral trade issues. The Chinese commerce ministry spokesman Gao Feng stated that the previous trade negotiations with the U.S. were constructive, but Beijing has had to respond in a strong manner due to the U.S. tariff threats. The major was trading 0.2 percent up at 110.50, having hit a low of 109.55 on Tuesday, its lowest since June 11. FxWirePro’s Hourly Yen Strength Index stood at 74.59 (Bullish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. unemployment benefits claims. Immediate resistance is located at 110.90 (June 15 High), a break above targets 111.08 (June 18 High). On the downside, support is seen at 109.96 (June 12 Low), a break below could take it lower 109.55 (June 19 Low).

GBP/USD: Sterling turned positive, rebounding from 7- month lows touched earlier in the session after the Bank of England kept rates on hold but three BoE MPC members voted for a rate hike. Chief economist Andy Haldane joined Michael Saunders and Ian McCafferty in calling for rates to rise to 0.75 percent, as labour demand could push wages up faster than expected. The major traded 0.3 percent up at 1.3202, having hit a low of 1.3102 earlier; it’s lowest since Nov 14. FxWirePro’s Hourly Sterling Strength Index stood at -87.41 (Slightly Bearish) 1000 GMT. Immediate resistance is located at 1.3224 (5-DMA), a break above could take it near 1.3307 (10-DMA). On the downside, support is seen at 1.3100, a break below targets 1.3061. Against the euro, the pound was trading 0.6 percent up at 87.33 pence, having hit a low of 88.01 pence the day before, it’s lowest since June 14.

USD/CHF: The Swiss franc declined, extending previous session losses, as the greenback rallied to 11-month highs following a bounced back in U.S. Treasury yields from 3-week lows. The major trades 0.05 percent up at 0.9961, having touched a high of 0.9990 on Monday, it’s highest since May. 21. FxWirePro’s Hourly Swiss Franc Strength Index stood at -0.66 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 1.0001 (May 21 High) and any break above will take the pair to next level till 1.0033 (May 17 High). The near-term support is around 0.9917 (June 19 Low) and any close below that level will drag it till 0.9895 (21-DMA).

Equities Recap

European shares slumped, weighed down by losses among autos sector stocks, while sterling rebounded from 7-month lows after the Bank of England sounded hawkish in its monetary policy statement.

The pan-European STOXX 600 index eased 0.4 percent at 382.89 points, while the FTSEurofirst 300 index declined 0.3 percent to 1,497.65 points.

Britain’s FTSE 100 trades 0.1 percent down at 7,628.06 points, while mid-cap FTSE 250 plunged 0.4 percent to 20,850.26 points.

Germany’s DAX fell 1.01 percent at 12,566.25 points; France’s CAC 40 trades 0.5 percent lower at 5,344.02 points.

Commodities Recap

Crude oil prices declined as crude exporters in OPEC appeared to be nearing a deal to increase production. International benchmark Brent crude was trading 0.8 percent down at $74.18 per barrel by 1023 GMT, having hit a low of $72.44 Monday, its lowest since May 2. U.S. West Texas Intermediate was trading 0.8 percent down at $64.79 a barrel, after falling as low as $63.62 on Monday, its lowest since April 10.

Gold prices slumped to 6-month lows as the dollar rallied on expectations of higher interest rates in the United States. Spot gold was 0.4 percent down at $1,262.75 an ounce by 1026 GMT, having hit a low of  $1,261.85 earlier, its lowest since Dec. 20.U.S. gold futures were down 0.8 percent at $1,264.50 an ounce.

Treasuries Recap

The U.S. 10-year Treasuries traded flat ahead of the 30-year TIPS auction, scheduled to be held today by 17:00GMT, besides, the initial jobless claims, due today at 12:30GMT, which will add further direction to the debt market. The yield on the benchmark 10-year Treasuries hovered around 2.93 percent, the super-long 30-year bond yields remained flat at 3.06 percent and the yield on the short-term 2-year traded nearly 1/2 basis point up at 2.56 percent.

The UK gilts slumped during late European session after the Bank of England (BoE) sounded hawkish in its monetary policy statement, albeit keeping rates on hold. Investors will now eye Governor Mark Carney’s speech, following the decision, due later today for added direction in the debt market. The yield on the benchmark 10-year gilts, jumped nearly 3-1/2 basis points to 1.33 percent, the super-long 40-year bond yields surged 2 basis points to 1.67 percent and the yield on the short-term 2-year traded 4 basis points higher at 0.75 percent.

The New Zealand bonds closed range-bound after the country’s gross domestic product (GDP) data for the first quarter of this year, met market expectations, albeit remaining lower than the previous reading in Q4 2017. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, rose nearly 1/2 basis point to 2.98 percent, the yield on the long-term 20-year note closed a tad higher at 3.30 percent and the yield on short-term 2-year closed nearly flat at 1.92 percent.

The Japanese 10-year government bonds remained tad lower during late Asian session as investors remained side-lined in a muted trading day ahead of the country’s national consumer price inflation (CPI) for the month of May, scheduled to be released today by 23:50GMT. The yield on Japan’s benchmark 10-year bond, which moves inversely to its price, rose 1/2 basis point to 0.04 percent, the yield on the long-term 30-year also remained tad higher at 0.72 percent and the yield on short-term 2-year traded nearly 1 basis point higher at -0.12 percent

The Australian government bonds plunged as concerns simmered about an escalation of a trade war between the U.S. and China. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 4 basis points to 2.690 percent, the yield on the long-term 30-year Note climbed 2 basis points to 3.188 percent and the yield on short-term 2-year up 2-1/2 basis points to 2.075 percent.

Source: FXWire Media Round Ups

 

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