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Europe Roundup: Sterling eases as Brexit cabinet meeting gets delayed, euro declines on downward revised EZ growth forecast, European shares gain – Thursday, November 9th, 2018

Market Roundup

  • EUR/USD -0.06%, USD/JPY 0.18%, GBP/USD -0.21%, EUR/GBP 0.16%
     
  • DXY 0.24%, DAX -0.14%, FTSE 0.19%, Brent 0.33%, Gold -0.22%
     
  • Democrat-led House seen backing Trump’s China trade war, scrutinizing talks with allies
     
  • Trump ousts Sessions, vows to fight Democrats if they launch probes
     
  • UK PM May dives into flurry of diplomacy in bid to clinch Brexit deal
     
  • Brexit deal within 7 days would be “pushing it”, says Britain's Hunt
     
  • EU sees euro zone growth slowdown amid trade, Italy, Brexit risks
     
  • Germany Sep Trade Balance, EUR, SA, 17.6 bln, 18.0 bln f'cast, 18.3 bln prev, 18.2 rvsd
     
  • Germany Sep Current Account – Balance NSA, 21.1 bln, 15.3 bln prev
     
  • France Sep Trade Balance, EUR, SA, -5.66 bln, -6.10 bln f'cast, -5.60 bln prev, -5.70 bln rvsd
     
  • China says Xi, Trump's G20 meeting will be of “great significance”
     
  • China to keep 2019 growth within reasonable range – premier
     

Economic Data Ahead

  • (0815 ET/1315 GMT) Canadian Mortgage and Housing Corp will report housing starts for the month of October. The indicator is expected to rise at a seasonally adjusted annualized rate of 200,000 after increasing 189,000 in the previous month.
     
  • (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have steadied at a seasonally adjusted 214,000 for the week ended Nov. 2, while continuing claims for the week ended Nov. 2  is expected to rise to 1.635 million from a previous reading of 1.631 million.
     
  • (0830 ET/1330 GMT) The Statistics Canada releases its New Housing Price Index (NHPI) for the month of September. The index remained flat in August.
     
  • (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending November 2.
     
  • (1400 ET/1900 GMT) The Federal Reserve's Federal Open Market Committee concludes a two-day meeting and announces its decision on interest rates followed by the statement.
     

Key Events Ahead

  • N/A Federal Reserve Bank of New York and the U.S. Small Business Administration hold background press call to discuss report, “Financing their Future: Veteran Entrepreneurs and Capital Access,” in New York.
     
  • (0915 ET/1415 GMT) Keynote speech by ECB Board Member Benoit Coeure at conference in Dublin
     
  • (1020 ET/1520 GMT) ECB President Mario Draghi speaks in Dublin
     
  • (1100 ET/1600 GMT) ECB's governing council member Ewald Nowotny speaks in Frankfurt
     
  • (1230 ET/1730 GMT) Swiss National Bank Governing Board Member Andréa Maechleris
     

FX Beat

DXY: The dollar index rose, extending previous session gains, as the Federal Reserve's Federal Open Market Committee concludes a two-day meeting and announces its decision on interest rates. Investor wait to see whether it offers clues about possible rate hikes in December and in 2019. The greenback against a basket of currencies trades 0.1 percent up at 96.26, having touched a low of 95.68 on Wednesday, its lowest since October 22. FxWirePro's Hourly Dollar Strength Index stood at -25.68 (Neutral) by 1100 GMT.

EUR/USD: The euro declined after the EU Commission in its quarterly economic forecasts stated that Eurozone growth is expected to slow in the coming years as the bloc faces risks from U.S. economic policies, Britain's unclear separation terms from the EU and Italy’s free-spending plans. The European currency traded 0.1 percent down up at 1.1414, having touched a high of 1.1499 on Wednesday, its highest since October 22. FxWirePro's Hourly Euro Strength Index stood at 13.64 (Neutral) by 1100 GMT. Immediate resistance is located at 1.1529 (October 8 High), a break above targets 1.1550 (October 22 High). On the downside, support is seen at 1.1382 (10-DMA), a break below could drag it till 1.1302 (October 31 Low).

USD/JPY: The dollar surged ahead of the Federal Reserve's monetary policy meeting outcome. The Fed is expected to keep interest rates on hold but signal further tightening in December. The major was trading 0.2 percent up at 113.73, having hit a high of 113.81 on Wednesday, its highest since October 8. FxWirePro's Hourly Yen Strength Index stood at -93.45 (Slightly Bearish) by 1100 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims and Fed policy meeting outcome. Immediate resistance is located at 114.10 (October 5 High), a break above targets 114.55 (October 4 High). On the downside, support is seen at 113.07 (November 5 Low), a break below could take it lower 112.35 (October 22 Low).

GBP/USD: Sterling eased after rising to a 3-week in the previous session, as a crucial cabinet meeting on Prime Minister May's proposed deal with the European Union meant to take place this week was delayed. The major traded 0.2 percent down at 1.3093, having hit a high of 1.3174 on Wednesday; it’s highest since October 17. FxWirePro's Hourly Sterling Strength Index stood at 30.47 (Neutral) 1100 GMT.  Immediate resistance is located at 1.3181 (October 15 High), a break above could take it near 1.3257 (October 12 High). On the downside, support is seen at 1.3011 (October 19 Low), a break below targets 1.2936 (October 23 Low). Against the euro, the pound was trading 0.1 percent down at 87.12 pence, having hit a high of 86.91 earlier, it’s highest since May 30.

USD/CHF: The Swiss franc edged down as the greenback surged ahead of the Federal Reserve's FOMC policy meeting outcome. The major trades 0.1 percent up at 1.0031, having touched a low of 0.9952 on Wednesday, it’s lowest since October 24. FxWirePro's Hourly Swiss Franc Strength Index stood at -73.37 (Bearish) by 1100 GMT. On the higher side, near-term resistance is around 1.0100 and any break above will take the pair to next level till 1.0145. The near-term support is around 0.9937 (September 23 Low) and any close below that level will drag it till 0.9897 (October 17 Low).

Equities Recap

European shares rallied, bolstered by gains in financial bank stocks, while the greenback surged as investors awaited the outcome of the latest U.S. Federal Reserve meeting.

The pan-European STOXX 600 index rallied 0.2 percent at 367.36 points, while the FTSEurofirst 300 index gained 0.2 percent to 1,442.29 points.

Britain's FTSE 100 trades 0.3 percent up at 7,136.89 points, while mid-cap FTSE 250 rose 0.4 percent to 19,213.89 points.

Germany's DAX declined 0.2 percent at 11,550.75 points; France's CAC 40 trades 0.2 percent higher at 5,132.00 points.

Commodities Recap

Crude oil prices rebounded from this week's 3-week lows after record Chinese crude imports eased some concern that demand in the world's largest commodity buyer may be flagging just as global supply is rising. International benchmark Brent crude was trading 0.2 percent up at $72.14 per barrel by 1111 GMT, having hit a low of $71.21 on Tuesday, its lowest since August 16. U.S. West Texas Intermediate was trading 0.2 percent up at $61.71 a barrel, after falling as low as $61.23 on Wednesday, its lowest since Mar. 16.

Gold prices declined to their lowest in a week as the dollar surged, while investors turned their focus to the Federal Reserve's monetary policy decision due later in the day. Spot gold was down 0.3 percent at $1,223.05 per ounce by 1116 GMT, having touched a low of $1,221.24 earlier, its lowest since Nov. 1. U.S. gold futures fell 0.2 percent to $1,226.3 per ounce.

Treasuries Recap

The U.S. Treasuries traded lower during late European session ahead of the Federal Open Market Committee’s (FOMC) interest rate decision, scheduled to be unveiled today by 19:00GMT, with little hopes of any change in the federal funds rate. The yield on the benchmark 10-year Treasuries rose 1 basis point to 3.224 percent, the super-long 30-year bond yields traded tad higher at 3.429 percent and the yield on the short-term 2-year remained 1/2 basis point higher at 2.953 percent.

The United Kingdom’s gilts fell during the afternoon session as investors expect to see a rise in the country’s gross domestic product (GDP) for the third quarter of this year, scheduled to be released on November 9 by 09:30GMT. The yield on the benchmark 10-year gilts, jumped nearly 3 basis points to 1.560 percent, the super-long 30-year bond yields surged nearly 3-1/2 basis points to 1.975 percent and the yield on the short-term 2-year traded nearly 1-1/2 basis points higher at 0.822 percent

The German bunds suffered during European session after investors have largely shrugged-off the lower-than-expected fall in the country’s trade balance data for the month of September, released today. The German 10-year bond yields, which move inversely to its price, rose 1/2 basis point to 0.452 percent, the yield on 30-year note climbed 1 basis point to 1.084 percent and the yield on short-term 2-year traded tad higher at -0.616 percent.

The Australian government bonds slumped across the curve during Asian session as investors took the U.S. mid-term elections results positively, providing some relief to equity markets. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 4-1/2 basis points to 2.768 percent, the yield on the long-term 30-year bond also jumped 3 basis points to 3.286 percent and the yield on short-term 2-year up 3-1/2 basis points to 2.087 percent.


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