News

Europe Roundup: Euro eases as EZ business growth decelerates, sterling gains on Brexit deal hopes, greenback consolidates amid holiday-thinned trading – Wednesday, December 5th, 2018 

Market Roundup

  • Eurozone Oct 2018 retail sales yy increase to 1.7 % (forecast 2.1 %) vs previous 0.3 % (revised from 0.8 %)
     
  • Eurozone Oct 2018 retail sales mm increase to 0.3 % (forecast 0.2 %) vs previous -0.5 % (revised from %)
     
  • United Kingdom Nov 2018 reserve assets total increase to 173215.06 usd vs previous 164239.03 usd
     
  • United Kingdom Nov 2018 Markit/CIPS service PMI decrease to 50.4 diff.idx (forecast 52.5 diff.idx) vs previous 52.2 diff.idx
     
  • United Kingdom Nov 2018 new passenger cars registration increase to 158639 no. of vs previous 153599 no. of
     
  • Eurozone Nov 2018 Markit services final PMI increase to 53.4 diff.idx (forecast 53.1 diff.idx) vs previous 53.1 diff.idx
     
  • Eurozone Nov 2018 Markit composite final PMI increase to 52.7 diff.idx (forecast 52.4 diff.idx) vs previous 52.4 diff.idx
     
  • Germany Nov 2018 Markit composite final PMI increase to 52.3 diff.idx (forecast 52.2 diff.idx) vs previous 52.2 diff.idx
     
  • Germany Nov 2018 Markit services PMI stays flat at 53.3 diff.idx (forecast 53.3 diff.idx) vs previous 53.3 diff.idx
     
  • France Nov 2018 Markit composite PMI increase to 54.2 diff.idx (forecast 54 diff.idx) vs previous 54 diff.idx
     
  • France Nov 2018 Markit services PMI increase to 55.1 diff.idx (forecast 55 diff.idx) vs previous 55 diff.idx
     
  • Italy Nov 2018 Markit/ADACI services PMI increase to 50.3 diff.idx (forecast 49.2 diff.idx) vs previous 49.2 diff.idx
     

Economic Data Ahead

  • No major economic data releases

Key Events Ahead

  • (1000 ET/1500 GMT) Bank of Canada key policy interest rate announcement in Ottawa
     
  • (1400 ET/1900 GMT) Federal Reserve issues the Beige Book of economic condition in Washington D.C.

FX Beat

DXY: The dollar index eased, as worries about U.S. bond markets signaled an impending recession. The greenback against a basket of currencies trades 0.1 percent down at 96.84, having touched a low of 96.38 on Tuesday, its lowest since Nov 22. FxWirePro's Hourly Dollar Strength Index stood at 60.63 (Bullish) by 1000 GMT.

EUR/USD: The euro eased after data showed Eurozone business growth was at its weakest pace in over two years in November, as a manufacturing-led slowdown showed further signs of spreading to the service industry. The European currency traded 0.1 percent down at 1.1336, having touched a high of 1.1418 on Tuesday, its highest since Nov. 23. FxWirePro's Hourly Euro Strength Index stood at -30.65 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1379 (December 3 High), a break above targets 1.1420 (November 16 High). On the downside, support is seen at 1.1305 (November 30 Low), a break below could drag it till 1.1263 (November 26 Low).

USD/JPY: The dollar bounced back from a 2-week low touched in the previous session on renewed optimism that China and the United States would sort out their trade dispute. The major was trading 0.2 percent up at 113.03, having hit a low of 112.57 on Tuesday, its lowest since November 20. FxWirePro's Hourly Yen Strength Index stood at 130.98 (Highly Bullish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the Fed Quarles's speech. Immediate resistance is located at 113.23 (November 22 High), a break above targets 114.03 (November 28 High). On the downside, support is seen at 112.42 (November 19 Low), a break below could take it lower 111.82 (October 25 Low).

GBP/USD: Sterling gained after falling to a 17-month low in the previous session as optimism grew that Britain may not leave the European Union without a deal in place. The major traded 0.5 percent up at 1.2773, having hit a low of 1.2658 on Tuesday; it’s lowest since June 2017. FxWirePro's Hourly Sterling Strength Index stood at -158.85 (Bearish) 1000 GMT. Immediate resistance is located at 1.2809 (November 30 High), a break above could take it near 1.2884 (November 19 High). On the downside, support is seen at 1.2661 (August 15 Low), a break below targets 1.2600. Against the euro, the pound was trading 0.4 percent up at 88.82 pence, having hit a low of 89.44 on Tuesday, it’s lowest since Nov. 19.

USD/CHF: The Swiss franc plunged to a 1-week low as investor risk sentiment slightly improved after China expressed confidence that it can reach a trade deal with the United States. The major trades 0.05 percent up at 0.9975, having touched a high of 1.0005 earlier; it’s highest since Nov. 28. FxWirePro's Hourly Swiss Franc Strength Index stood at 26.21 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 1.0026 (Oct. 26 High) and any break above will take the pair to next level till 1.0050 (Nov. 7 High). The near-term support is around 0.9908 (November 20 Low), and any close below that level will drag it till 0.9881 (October 12 Low).

Equities Recap

European shares plunged as European Union's dispute with Italy over its proposed budget and concerns about global economic growth dented investor sentiment.

The pan-European STOXX 600 index slumped 0.7 percent at 355.88 points, while the FTSEurofirst 300 index declined 0.9 percent to 1,402.19 points.

Britain's FTSE 100 trades 1.1 percent down at 6,948.91 points, while mid-cap FTSE 250 fell 0.1 to 18,304.50 points.

Germany's DAX declined 0.7 percent at 11,253.15 points; France's CAC 40 trades 0.8 percent lower at 4,972.77 points.

Commodities Recap

Crude oil prices surged, reversing most of its previous session losses, ahead of an OPEC meeting at which the producer club is expected to decide supply cuts. International benchmark Brent crude was trading 0.8 percent up at $61.83 per barrel by 1037 GMT, having hit a high of $63.55 on Tuesday, its highest since November 22. U.S. West Texas Intermediate was trading 0.9 percent up at $53.07 a barrel, after rising as high as $54.54 on Tuesday, its highest since the November 22.

Gold prices slumped, retreating from a more than five-week high touched in the previous session, as the dollar rebounded from recent lows. Spot gold was 0.2 percent down at $1,235.59 per ounce at 1040 GMT, having touched a high of $1,241.82 on Tuesday, its highest level since Oct. 26. U.S. gold futures were down 0.5 percent at $1,240.7 per ounce.

Treasuries Recap

The United Kingdom’s gilts continued to trade mixed during the afternoon session after the country’s services PMI for the month of November disappointed market participants and investors will now keenly eye the 30-year auction, scheduled to be held on December 6 by 10:45GMT for detailed direction in the debt market. The yield on the benchmark 10-year gilts, jumped nearly 4 basis points to 1.320 percent, the super-long 30-year bond yields slumped nearly 3 basis points to 1.924 percent and the yield on the short-term 2-year traded 4-1/2 basis points higher at 0.768 percent.

The German bunds rallied during European session after the country’s services PMI for the month of November remained unchanged and investors will now be focusing on the Eurozone’s gross domestic product (GDP) for the third quarter of this year, scheduled to be released on December 7 by 10:00GMT for further direction in the debt market. The German 10-year bond yields, which move inversely to its price, slipped 1 basis point to 0.258 percent, the yield on 30-year note fell 1-1/2 basis points to 0.903 percent and the yield on short-term 2-year traded nearly 2 basis points lower at -0.627 percent.

The Australian government bonds gained during late Asian session after the country’s gross domestic product (GDP) for the third quarter of this year, advanced at a pace slower than market expectations, also disappointing the previous quarter reading. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 4-1/2 basis points to 2.500 percent, the yield on the long-term 30-year bond hovered around 3.022 percent and the yield on short-term 2-year traded tad down at 1.963 percent.


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