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Home » Blogs » Europe roundup: Sterling rises above 1.4200, Dollar index subdued ahead of U.S. labor report, European shares bounce back – Thursday, February 1st, 2018

Europe roundup: Sterling rises above 1.4200, Dollar index subdued ahead of U.S. labor report, European shares bounce back – Thursday, February 1st, 2018

Europe roundup: Sterling rises above 1.4200, Dollar index subdued ahead of U.S. labor report, European shares bounce back – Thursday, February 1st, 2018

Market Roundup

  • United Kingdom Jan Markit/CIPS manufacturing PMI decrease to 55.3 (forecast 56.5 ) vs previous 56.2 (revised from 56.3 )
  • Greece Jan PMI manufacturing increase to 55.2 vs previous 53.1
  • Eurozone Jan Markit manufacturing final PMI stays flat at 59.6 (forecast 59.6 ) vs previous 59.6
  • Germany Jan Markit/BME manufacturing PMI decrease to 61.1 (forecast 61.2 ) vs previous 61.2
  • France Jan Markit manufacturing PMI increase to 58.4 (forecast 58.1 ) vs previous 58.1
  • Italy Jan Markit/ADACI Manufacturing PMI increase to 59 (forecast 57.5 ) vs previous 57.4
  • Switzerland Jan manufacturing PMI decrease to 65.3 (forecast 64 ) vs previous 65.6 (revised from 65.2 )
  • Switzerland Dec retail sales yy increase to 0.6 % vs previous 0.3 % (revised from -0.2 %)
  • Norway Jan manufacturing PMI sa increase to 59 (forecast 56.5 ) vs previous 58.1 (revised from 57.8 )
  • United Kingdom Jan nationwide house price yy increase to 3.2 % (forecast 2.5 %) vs previous 2.6 %

Economic Data Ahead

  • (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 5,000 to a seasonally adjusted 238,000 for the week ended Jan. 26, while continuing claims for the week ended Jan. 19 is expected to decline to 1.928 million from a previous reading of 1.937 million.
  • (0830 ET/1330 GMT) The U.S. Labor Department will release preliminary labor costs report for the fourth quarter. The indicator is expected to nudge up 0.8 percent after posting a drop of 0.2 percent in the previous quarter.
  • (0830 ET/1330 GMT) The U.S. Labor Department is likely to report that preliminary non-farm productivity rose 1.0 percent in the fourth quarter, after rising 3.0 percent in the previous quarter.
  • (0930 ET/1430 GMT) The Marit will release Canada’s Manufacturing PMI for the month of January. The indicator stood at 54.7 in the prior month.
  • (0945 ET/1445 GMT) Financial firm Markit is expected to showed that U.S. Manufacturing PMI eased to 54.9 in the month of January from 55.5 in the month before.
  • (1000 ET/1500 GMT) The Institute for Supply Management is likely to report that U.S. manufacturing index dropped to 58.8 in January from a reading of 59.3 in December.
  • (1000 ET/1500 GMT) The Commerce Department is likely to report that construction spending for December rose 0.4 percent after posting a 0.8 percent gain in November.
  • (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending January 26.
  • (1030 ET/1530 GMT) Autodata Corp releases U.S. auto sales figures for January. Vehicles sales are likely to decline to 17.2 million units from 17.9 million in December.
  • (1845 ET/2245 GMT) The Statistics New Zealand releases building permits seasonally adjusted data for the month of December. The index posted a rise of 10.8 percent in November.
  • (1645 ET/2145 GMT) The Statistics New Zealand will release visitor arrivals report for the month of December. The indicator posted an annualized gain of 8.0 percent in the prior month.

FX Beat

DXY: The dollar index held firm just above 3-year lows after the Federal Reserve said inflation is likely to quicken this year, bolstering expectations borrowing costs will continue to climb under incoming central bank chief Jerome Powell. The greenback against a basket of currencies traded 0.1 percent down at 89.04, having touched a low of 88.44 on Friday, its lowest since December 2014. FxWirePro’s Hourly Dollar Strength Index stood at -58.96 (Bearish) by 1000 GMT.

EUR/USD: The euro rose, extending gains for the third straight session, amid prospects for the European Central Bank to begin normalizing monetary policy this year after underlying eurozone inflation picked up pace. The European currency traded 0.2 percent up at 1.2443, having touched a low of 1.2336 on Tuesday, its lowest since Jan. 24. FxWirePro’s Hourly Euro Strength Index stood at 104.07 (Highly Bullish) by 1000 GMT. Immediate resistance is located at 1.2500, a break above targets 1.2590. On the downside, support is seen at 1.2307 (38.2% retracement of 1.2264 and 1.2537), a break below could drag it lower 1.2252 (23.6% retracement).

USD/JPY: The dollar rallied to a 6-day high after the Federal Reserve said inflation was likely to rise this year, while investors awaited the U.S. nonfarm payroll data for cues on the strength of the world’s largest economy.  The major was trading 0.4 percent up at 109.66, having hit a low of 108.28 on Friday, its lowest since Sept 11. FxWirePro’s Hourly Yen Strength Index stood at -143.79 (Highly Bearish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. unemployment benefit claims, preliminary nonfarm productivity and Manufacturing PMI from both Markit and ISM for further momentum. Immediate resistance is located at 109.90 (50.0% retracement of 111.49 and 108.28), a break above targets 110.27 (38.2% retracement). On the downside, support is seen at 108.20, a break below could take it lower 108.00.

GBP/USD: Sterling advanced above the 1.4200 handle after British small manufacturers reported the fastest rise in new orders since 1995 in January and were more optimistic in near term. The major traded 0.4 percent up at 1.4238, having hit a high of 1.4345 on Thursday, it’s highest since June 2016. FxWirePro’s Hourly Sterling Strength Index stood at 97.15 (Highly Bullish) by 1000 GMT.  Immediate resistance is located at 1.4300, a break above could take it near 1.4345. On the downside, support is seen at 1.4066 (10-DMA), a break below targets 1.3904 (50.0% retracement of 1.3458 and 1.4345). Against the euro, the pound was trading 0.1 percent down at 87.36 pence, having hit a low of 88.33 pence on Tuesday, it’s lowest since Jan. 22.

USD/CHF: The Swiss franc eased after rising for two consecutive sessions, as the greenback rebounded from multi-year lows after the Federal Reserve kept interest rates unchanged but said inflation is likely to quicken this year. The major trades 0.2 percent up at 0.9328, having touched a low of 0.9289 on Wednesday, it’s lowest since August. 2015. FxWirePro’s Hourly Swiss Franc Strength Index stood at 88.83 (Slightly Bullish) by 1000 GMT. On the higher side, near-term resistance is around 0.9434 (61.8% retracement of 0.9666 and 0.9290) and any break above will take the pair to next level till 0.9479 (50.0% retracement). The near-term support is around 0.9280 and any close below that level will drag it to next level till 0.9240.

Equities Recap

European shares surged following three days of losses, boosted by positive results and gains by banks, while the greenback steadied against basket a currencies after the U.S. Federal Reserve flagged higher interest rates later this year.

The pan-European STOXX 600 index rallied 0.5 percent to 397.27 points, while the FTSEurofirst 300 index edged up 0.3 percent to 1,558.24 points.

Britain’s FTSE 100 trades 0.05 percent lower at 7,532.96 points, while mid-cap FTSE 250 gained 0.2 percent to 20,281.05 points.

Germany’s DAX rose 0.4 percent at 13,245.43 points; France’s CAC 40 trades 0.5 percent up at 5,510.77 points.

Commodities Recap

Crude oil prices rose as OPEC’s strong compliance with a supply reduction pact offset news that U.S. production topped 10 million barrels per day for the first time in since 1970. International benchmark Brent crude was trading 1.1 percent up at $69.60 per barrel by 0958 GMT, having hit a low of $67.82 the day before, its lowest since Jan. 9. U.S. West Texas Intermediate was trading 0.9 percent up at $65.36 a barrel, after falling as low as $63.64 on Wednesday, its weakest since Jan. 22.

Gold prices declined after the Federal Reserve left interest rates unchanged but hinted at hikes later this year. Spot gold was 0.4 percent down at $1,340.44 per ounce by 1000 GMT, having hit a low of 1,332.64 in the previous session, lowest since Jan 23.  U.S. gold futures for February delivery were nearly flat at $1,339.00 per ounce.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.748 percent higher by 0.028 bps, while 5-year yield was 0.027 bps up at 2.552 percent.

The British 10-year gilt yields rose to their highest level since May 2016. The 10-year gilt yield touched 1.551 percent, the highest level since May 4, 2016, before easing back to 1.54 percent – up 2.4 basis points on the day. The spread between the 10-year British government bond yield and the equivalent German bond yield stood at 81.4 basis points.

The Japanese government bond prices slipped, weighed by a strong bounce in Tokyo stocks, although losses were limited. The five-year yield rose 1 basis point to minus 0.075 percent and the 10-year yield climbed 1 basis point to 0.090 percent.

The Australian government bond futures were mixed, with the three-year bond contract up half a tick at 97.810. The 10-year contract eased 2 ticks to 97.165. The New Zealand government bonds eased, sending yields 1 basis point higher at the long end of the curve.

Source: FXWire Media Round Ups

 

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