Europe Roundup: Sterling rebounds on expectations lawmakers would vote against no-deal Brexit, euro rallies on stronger-than-expected EZ industrial production, European shares rally – March 13th, 2019

Market Roundup

  • EUR/USD 011%, USD/JPY -0.04%, GBP/USD 0.46%, EUR/GBP -0.37%
  • DXY -0.06%, DAX -0.13%, FTSE 0.03%, Brent 0.73%, Gold 0.51%
  • Brexit crisis deepens as British lawmakers to vote on no-deal exit
  • EU's Barnier questions point of extending Brexit
  • China orders banks to boost financial support to small firms
  • Italy's recession is self-inflicted – ECB's Angeloni
  • Souring consumer mood in Australia may prompt RBA rate cut soon
  • EZ Jan Industrial Production MM, 1.4%, 1.0% f'cast, -0.9% prev
  • EZ Jan Industrial Production YY, -1.1%, -2.1% f'cast, -4.2% prev

Economic Data Ahead

  • (0830 ET/1230 GMT) The U.S. producer price index is likely to have increased 0.2 percent in February, while in the 12 months through the same period, it is expected to have advanced 1.9 percent. PPI excluding food and energy probably edged up 0.2 percent after rising 0.3 percent in January.
  • (0830 ET/1230 GMT) The U.S. durable goods orders are expected to have decreased 0.5 percent in January after rising 1.2 percent in December. Non-defense capital goods orders excluding aircraft are likely to have risen 0.1 percent after falling 1.0 percent the prior month.
  • (1000 ET/1400 GMT) The Commerce Department is likely to report that U.S. construction spending increased 0.4 percent in January, after easing 0.6 percent in the previous month.
  • (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending March 8.

Key Events Ahead

  • (1300 ET/1700 GMT) ECB's Benoit Coeure delivers a speech at Universita Bocconi in Milan

FX Beat

DXY: The dollar index plunged for the fourth straight session, as weak inflation report for February reinforced expectations the Federal Reserve will remain patient on rates, pushing the U.S. 10-year bond yields to 10-week lows. The greenback against a basket of currencies traded 0.1 percent down at 96.87, having touched a high of 97.71 on Thursday, its highest since December. FxWirePro's Hourly Dollar Strength Index stood at -67.81 (Bearish) by 1000 GMT.

EUR/USD: The euro surged, hovering towards a 5-day peak after data showed Eurozone industrial production was stronger than expected in January, boosted by strong contribution from energy. The European currency traded 0.1 percent up at 1.1293, having touched a high of 1.1304 on Tuesday, its highest since Mar. 7. FxWirePro's Hourly Euro Strength Index stood at 108.64 (Highly Bullish) by 1000 GMT. Immediate resistance is located at 1.1327 (61.8% retracement of 1.1176 and 1.1496), a break above targets 1.1367 (78.6% retracement). On the downside, support is seen at 1.1252 (5-DMA), a break below could drag it till 1.1176 (March 7 Low).

USD/JPY: The dollar consolidated within narrow ranges as slowing economic growth supported the Federal Reserve's patient approach towards further interest rate increases this year. The major was trading flat at 111.35, having hit a low of 110.74 on Friday, its lowest since February 28. FxWirePro's Hourly Yen Strength Index stood at -76.11 (Slightly Bearish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of U.S. producer price index, durable goods and construction spending. Immediate resistance is located at 111.65 (Mar. 8 High), a break above targets 112.13 (Mar. 5 High). On the downside, support is seen at 110.66 (Feb.28 Low), a break below could take it lower at 110.35 (Feb.27 Low).

GBP/USD: Sterling rebounded on growing expectations that Britain's lawmakers would vote against leaving the European Union in 16 days time without an agreement. The parliament will vote again later in the day on whether the United Kingdom should leave the European Union on March 29 without a deal. The major traded 0.6 percent up at 1.3151, having hit a low of 1.2960 on Monday; it’s lowest since Feb.19. FxWirePro's Hourly Sterling Strength Index stood at -9.89 (Neutral) 1000 GMT. Immediate resistance is located at 1.3170 (Mar. 11 High), a break above could take it near 1.3254 (Mar. 4 High). On the downside, support is seen at 1.3026 (Feb. 21 Low), a break below targets 1.2989 (Mar. 11 Low). Against the euro, the pound was trading 0.5 percent up at 85.86 pence, having hit a high of 84.74 on Tuesday, it’s highest since May 2017.

USD/CHF: The Swiss franc rallied to a near 1-week peak as mounting concern over global growth and trade sent investors seeking safety in safe-haven assets. The major trades 0.2 percent down at 1.0056, having touched a high of 1.0124 on Thursday; it’s highest since November 13. FxWirePro's Hourly Swiss Franc Strength Index stood at 2.00 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 1.0124 (Mar. 7 High) and any break above will take the pair to next level till 1.0160 (Mar. 2017). The near-term support is around 1.0001 (February 19 Low), and any close below that level will drag it till 0.9983 (February 25 Low).

Equities Recap

European shares gained on expectations that British lawmakers would vote to reject a disorderly no-deal Brexit.

The pan-European STOXX 600 index surged 0.1 percent at 373.74 points, while the FTSEurofirst 300 index rallied 0.2 percent to 1,469.93 points.

Britain's FTSE 100 trades 0.05 percent down at 7,147.22 points, while mid-cap FTSE 250 eased 0.1 to 19,124.75 points.

Germany's DAX fell 0.05 percent at 11,518.63 points; France's CAC 40 trades 0.2 percent higher at 5,280.95 points

Commodities Recap

Crude oil prices rose, supported by an official forecast showing slower-than-expected U.S. production, and as U.S. sanctions stall exports from Venezuela. International benchmark Brent crude was trading 0.5 percent up at $67.16 per barrel by 1040 GMT, having hit a high of $67.38 on Tuesday, its highest since Feb. 25. U.S. West Texas Intermediate was trading 0.7 percent higher at $57.44 a barrel, after rising as high as $57.53 on Tuesday, its highest since the March 1.

Gold prices surged to a near 2-week peak, as investors rushed into the safe-haven assets after British lawmakers rejected an amended exit deal, while a weaker dollar lent further support. Spot gold was 0.5 percent up at $1,308.04 per ounce by 1043 GMT, having touched a high of $1,309.04, its highest since March 1. U.S. gold futures rose 0.5 percent to $1,304.80 an ounce.

Treasuries Recap

The U.S. Treasuries suffered during afternoon session ahead of the country’s producer price inflation (CPI) data for the month of February, scheduled to be released today at 12:30GMT, besides the super-long 30-year note auction, also due today at 17:00GMT. The yield on the benchmark 10-year Treasury yield rose 1-1/2 basis points to 2.620 percent, the super-long 30-year bond yields surged 2 basis points to 3.010 percent and the yield on the short-term 2-year traded nearly 1-1/2 basis points up at 2.467 percent.

The United Kingdom’s gilts slumped during the afternoon session after Prime Minister Theresa faced a crushing defeat at the Brexit vote in the Parliament held yesterday by 149 votes (242 vs 391). The yield on the benchmark 10-year gilts, rose 1-1/2 basis points to 1.180 percent, the super-long 30-year bond yields surged 1-1/2 basis points to 1.704 percent and the yield on the short-term 2-year climbed nearly 2-1/2 basis points to 0.738 percent.

The German bunds slipped during European session after Eurozone’s industrial production for the month of January cheered market participants, rebounding from the previous reading in December. The German 10-year bond yields, which move inversely to its price, rose nearly 1-1/2 basis points to 0.067 percent, the yield on 30-year note surged 1-1/2 basis points to 0.739 percent while the yield on short-term 2-year traded flat at -0.540 percent.

The Japanese government bonds jumped tracking a similar movement in the United States Treasuries during the overnight session, following a slight rise in the latter’s consumer price index (CPI) for the month of February. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slumped nearly 4-1/2 basis points to -0.043 percent, the yield on the long-term 30-year edged nearly 1-1/2 basis points lower at 0.579 percent and the yield on short-term 2-year plunged 15-1/2 basis points to -0.154 percent.

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