News

Europe Roundup: Sterling eases ahead of BoE policy meeting outcome, euro plunges on weak-than-expected German data, European shares slump – Thursday, February 7th, 2019

Market Roundup

  • United Kingdom Jan 2019 BBA mortgage rate stays flat at 4.4 % vs previous 4.4 %
     
  • Italy Dec 2018 retail sales sa mm decrease to -0.7 % vs previous 0.6 % (revised from 0.7 %)
     
  • Italy Dec 2018 Retail sales nsa yy decrease to -0.6 % vs previous 1.7 % (revised from 1.6 %)
     
  • United Kingdom Jan 2019 Halifax House Price 3m/yy decrease to 0.8 % (forecast 1.5 %) vs previous 1.3 %
     
  • United Kingdom Jan 2019 Halifax House Prices mm decrease to -2.9 % (forecast -0.5 %) vs previous 2.2 %
     
  • Spain Dec 2018 industrial output cal adj yy decrease to -6.2 % (forecast -2.3 %) vs previous -3.2 % (revised from -2.6 %)
     
  • Switzerland Jan 2019 forex reserves chf increase to 741473.73 chf vs previous 728745.45 chf (revised from 728961.99 chf)
     
  • France Dec 2018 current account – balance nsa increase to 4.36 eur vs previous -4.25 eur
     
  • France Dec 2018 exports, eur approx time increase to 42.45 eur vs previous 41.53 eur (revised from 41.2 eur)
     
  • France Dec 2018 imports, eur approx time increase to 47.12 eur vs previous
     
  • France Dec 2018 trade balance, eur, sa increase to -4.65 eur (forecast -4 eur) vs previous -4.81 eur (revised from -5.1 eur)
     
  • France Dec 2018 current account increase to -1.1 eur vs previous -2.8 eur
     
  • Greece Nov 2018 unemployment rate (month) decrease to 18.5 % vs previous 18.7 % (revised from 18.6 %)
     

Economic Data Ahead

  • (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 32,000 to a seasonally adjusted 221,000 for the week February 1, while continuing claims for the week ended January 25 is expected to decline to 1.720 million from a previous week's reading of 1.728 million.
     
  • (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending January 20.
     
  • (1500 ET/2000 GMT) The U.S. Federal Reserve is likely to report that consumer credit declined to $17.0 billion in December from $22.15 billion the month before.
     

Key Events Ahead

  • (0700 ET/1200 GMT) Bank of England announces rate decision and publishes minutes of meeting – London
     
  • (0715 ET/1215 GMT) European Central Bank's Yves Mersch delivers speech at American European Community Association – Brussels
     
  • (0915 ET/1415 GMT) Federal Reserve Bank of Dallas President Robert Kaplan participates in a moderated question-and-answer session before the University of Texas at Austin McCombs School of Business Outlook Series.
     
  • (0930 ET/1430 GMT) Federal Reserve Vice Chairman Richard Clarida speaks at Czech National Bank – Prague
     
  • (1900 ET/0000 GMT) Federal Reserve Chairman Jerome Powell is expected to deliver opening remarks and answer questions via livestream before event, “Conversation with the Chairman: a Teacher Town Hall Meeting” hosted by the Federal Reserve Bank of Richmond Charlotte branch.
     
  • (1930 ET/0030 GMT) Federal Reserve Bank of St. Louis President James Bullard is expected to deliver a presentation on the U.S. economy and monetary policy before the 57th Winter Institute hosted by the Center for Economic Education, the Economics Department and the School of Public Affairs, St. Cloud State University.
     

FX Beat

DXY: The dollar index advanced to a 2-week peak as investors awaited Reserve Chairman Jerome Powell's speech that could provide further insight on the Fed’s monetary policy outlook. The greenback against a basket of currencies trades 0.2 percent up at 96.58, having touched a high of 96.61, its highest since January 24. FxWirePro's Hourly Dollar Strength Index stood at 117.23 (Highly Bullish) by 1000 GMT.

EUR/USD: The euro slumped to a near 2-week low after the European Commission sharply cut its forecasts for economic growth in the euro zone this year and next because of an expected slowdown in the largest countries of the bloc. Moreover, separate data showing German industrial output unexpectedly fell in December for the fourth consecutive month dented the bid tone around the major.  The European currency traded 0.2 percent down at 1.1336, having touched a low of 1.1331 earlier, its lowest since Jan. 25. FxWirePro's Hourly Euro Strength Index stood at -70.54 (Bearish) by 1000 GMT. Immediate resistance is located at 1.1406 (January 17 High), a break above targets 1.1474 (December 21 High). On the downside, support is seen at 1.1325 (Jan. 2 Low), a break below could drag it till 1.1300.

USD/JPY: The dollar declined, as investors remained cautious ahead of a meeting between the U.S. and Chinese officials next week that is aimed to clinch a deal to avert a March 2 increase in U.S. tariffs on China's goods. The major was trading 0.1 percent down at 109.86, having hit a high of 110.16 on Monday, its highest since December 31. FxWirePro's Hourly Yen Strength Index stood at 81.04 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims, consumer credit change and Fed Clarida's speech. Immediate resistance is located at 110.47 (Dec. 31 High), a break above targets 111.19 (Dec. 24 High). On the downside, support is seen at 109.16 (Jan. 28 Low), a break below could take it lower at 108.80 (Jan. 30 Low).

GBP/USD: Sterling plunged to a fresh 2-week low after Prime Minister Theresa May stated that her task to force change a deal agreed with the European Union almost three months ago would not be easy. The major traded 0.2 percent down at 1.2910, having hit a low of 1.2894; it’s lowest since January 22. FxWirePro's Hourly Sterling Strength Index stood at -48.12 (Neutral) 1000 GMT. Investors’ attention will remain on BoE policy decision and Governor Carney's speech, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3001 (January 17 High), a break above could take it near 1.3047 (November 13 High). On the downside, support is seen at 1.2879 (November 14 Low), a break below targets 1.2827 (November 12 Low). Against the euro, the pound was trading flat at 87.80 pence, having hit a low of 88.21 on Tuesday, it’s lowest since Jan. 22.

USD/CHF: The Swiss franc tumbled to a 2-1/2 month low, as the greenback rallied ahead of Federal Reserve Chairman Jerome Powell's speech. The major trades up at 1.0022, having touched a high of 1.0028 earlier; it’s highest since November 16. FxWirePro's Hourly Swiss Franc Strength Index stood at -91.57 (Slightly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 1.0048 (November 2 High) and any break above will take the pair to next level till 1.0070 (November 8 High). The near-term support is around 0.9961 (January 22 Low), and any close below that level will drag it till 0.9889 (December 7 Low).

Equities Recap

European shares tumbled from 12-week highs, weighed down by disappointing results from advertising companies.

The pan-European STOXX 600 index plunged 0.4 percent at 364.07 points, while the FTSEurofirst 300 index declined 0.4 percent to 1,432.68 points.

Britain's FTSE 100 trades 0.1 percent down at 7,168.08 points, while mid-cap FTSE 250 eased 0.6 to 18,946.06 points.

Germany's DAX fell 0.7 percent at 11,247.20 points; France's CAC 40 trades 0.4 percent lower at 5,057.28 points

Commodities Recap

Crude oil prices eased after U.S. crude inventories rose and the country's production remained at record levels.  International benchmark Brent crude was trading 0.05 percent down at $62.53 per barrel by 1026 GMT, having hit a high of $63.61 on Monday, its highest since December 7. U.S. West Texas Intermediate was trading 0.05 percent lower at $53.87 a barrel, after rising as high as $55.72 on Monday, its highest since the November 21.

Gold prices plunged to an over 1-week low, pressured by a stronger dollar, however, worries over slowing global economic growth provided some support. Spot gold eased 0.05 percent to $1,306.77 per ounce by 1032 GMT, having touched a low of $1,302.71, its lowest level since Jan. 29. U.S. gold futures were down 0.4 percent at $1,308.70.

Treasuries Recap

The U.S. Treasuries surged during late European session ahead of the country’s weekly initial jobless claims and super-long 30-year auction, both scheduled for today at 13:30GMT and 18:00GMT respectively. The yield on the benchmark 10-year Treasury yield slumped 3-1/2 basis points to 2.668 percent, the super-long 30-year bond yields suffered nearly 3 basis points to 3.010 percent and the yield on the short-term 2-year traded 2 basis points lower at 2.504 percent.

The United Kingdom’s gilts jumped during the late afternoon session, ahead of the Bank of England’s (BoE) monetary policy meeting, scheduled to be held later today. The yield on the benchmark 10-year gilts, plunged nearly 3 basis points to 1.188 percent, the super-long 30-year bond yields slumped nearly 2 basis points to 1.702 percent and the yield on the short-term 2-year fell 1 basis point to 0.724 percent.

The Japanese government bonds remained narrowly mixed during late Asian session amid silent trading hours that witnessed data of little economic significance after the country’s super-long 30-year bond auction attracted a sufficient amount of demand ahead of the household spending data for the month of December, scheduled to be released today by 23:30GMT. The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained tad lower at -0.009 percent, the yield on the long-term 30-year hovered around 0.592 percent while the yield on short-term 2-year plunged 15 basis points to -0.153 percent.

The Australian government bonds gained sharply across the curve during Asian trading session after the Reserve Bank of Australia’s Governor Philip Lowe turned dovish in his speech at the National Press Club of Australia early today, pushing the 10-year yield to 1-month low. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell about 7 basis points to 2.18 percent (lowest since Jan 4), the yield on the long-term 30-year bond also dipped 6 basis points to 2.72 percent and the yield on short-term 2-year slumped over 8 basis points to 1.78 percent.


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