News

Europe Roundup: Dollar index pulls away from 98 handle; Gold continues bullish run, retakes $1,500; European shares extend sell-off – Thursday, August 15, 2019

Market Roundup

  • Australian jobs boon at risk as RBA warns businesses against turning glum
     
  • Modest gains in China's new home prices give authorities breathing room
     
  • Oil slips further below $60 on recession concerns, U.S. supply
     
  • Bears prey on most Asian currencies as growth fears rage on: Reuters poll
     
  • Most currencies softer as recession fears grip markets
     
  • U.S. yield curve remains inverted for second day
     
  • Online spending splurge helps UK retail sales grow unexpectedly in July
     
  • Bitcoin slumps to two-week low on technical trading, market jitters

Economic Data Ahead

  • (0830 ET/1230 GMT) NY Empire State Manufacturing Index (Forecast 3.0, Prior 4.3)
     
  • (0830 ET/1230 GMT) U.S. Retail Sales Aug 9 (Forecast 0.3 percent, Prior 0.4 percent)
     
  • (0830 ET/1230 GMT) U.S. Initial Jobless Claims M/M July (Forecast 214K, Prior 209K)
     
  • (0830 ET/1230 GMT) U.S. Continuing Jobless Claims (Aug 2) (Forecast 1.690M, Prior 1.684M)
     
  • (0830 ET/1230 GMT) U.S. Nonfarm Productivity (Q2) Prelim (Forecast 1.5 percent, Prior 3.4 percent)
     
  • (0830 ET/1230 GMT) U.S. Philadelphia Fed Manufacturing Survey (Aug) (Forecast 10.0, Prior 21.8)
     
  • (0830 ET/1230 GMT) Canada ADP Employment Change (Jul) (Prior 30.4K)
     
  • (0915 ET/1315 GMT) U.S. Industrial Production (M/M) (Jul) (Forecast 0.2 percent, Prior 0.0 percent)
     
  • (0915 ET/1315 GMT) U.S. Capacity Utilization (Jul) (Forecast 77.8 percent, Prior 77.9 percent)
     
  • (1000 ET/1400 GMT) U.S. Business Inventories (Jun) (Forecast 0.1 percent, Prior 0.3 percent)
     
  • (1000 ET/1400 GMT) U.S. NAHB Housing Market Index (Aug) (Forecast 65, Prior 65)

Key Events Ahead 

  • No Significant Event Scheduled

FX Beat

DXY: The US dollar index extends choppy trade. DXY trades near 98 handle, consolidating the recent rally to weekly tops of 98.05. 

EUR/USD: EUR/USD consolidates break below 21-EMA. The major trades 0.14 percent higher on the day at 1.1153 at 11:10 GMT. Major trend is bearish, upside lacks traction. Stochastics RSI is showing a rollover from overbought levels. Price action is below cloud and major moving averages. Volatile moves likely amid holiday-thinned trades in Europe. Focus on U.S. Treasury yields and upcoming U.S data – Retail Sales, Initial Jobless Claims and Industrial Production for further direction. 20-DMA is immediate resistance at 1.1160, while immediate support lies at 1.1110 (trendline).

USD/CHF: USD/CHF edges lower from session highs at 0.9757. The major was trading at 0.9735 at 11:20 GMT, down 0.05 percent at the time of writing. Major trend in the pair is bearish. Price action is extending break below 200-DMA. Demand for the safe-haven Franc is likely to remain underpinned amid growing recession fears. The pair finds strong support at weekly cloud base. Break below will see resumption of weakness. Immediate support lies at hourly cloud base at 0.9715, while 21-EMA is immediate resistance at 0.9797.

GBP/USD: Cable extends gains on the day after unexpected rise in UK retail sales m/m in July. Data released earlier today showed UK retail sales came in at +0.2 percent m/m in July vs. -0.2 percent expected and +0.9 percent previous. On an annualized basis, the UK retail sales rose 3.3 percent in July versus 2.6 percent expected and +3.8 percent prior. The pair is consolidating at multi-month lows. Technical show slight pullback in the pair. Major trend remains strongly bearish. Next major support lies at 1.1904  (Oct 2016 low). Price has edged above 5-DMA. Minor upticks likely to test 21-EMA at 1.2212.

USD/JPY: A sharp recovery in UST yields and S&P 500 futures knocks off Yen. USD/JPY slips lower from session highs at 106.80 and was trading at 105.83, down 0.09 percent at 10:20 GMT. Major trend in the pair is bearish. Upside finds stiff resistance at 21-EMA at 106.87. Break above could see minor upside. Demand for the safe-haven Yen is likely to remain underpinned amid growing recession fears. Downside resumption will see test of Jan 3rd lows at 104.65.

Equities Recap

European shares extend steep sell-off. The pan-European stock benchmark index EURO STOXX 600 was down around 0.55% at 363.00 at 11:30 GMT. FTSEurofirst 300 index was down 0.61 percent at 1,424.09 points.

Britain's FTSE 100 was trading 1.14 percent down at 7,066.87 points, while mid-cap FTSE 250 was down 0.64 percent at 18,610.90 points.

Germany's DAX trades 0.96 percent lower at 11,382.66 points; France's CAC 40 trades 0.42 percent lower at 5,229.09 points.

Commodities Recap

Gold keeps bullish momentum amid falling risk sentiment and demand for safe-havens. Spot Gold was trading at $1,519.47 at 11:25 GMT. 

Crude oil extends weakness for the 2nd straight session. WTI stood at 54.48, down 0.75 percent at 11:30 GMT. Rising US crude oil stocks keep pressure lower.

Treasuries Recap

U.S.: The U.S. Treasuries gained during Thursday’s afternoon session on heightened concerns about the world economy as the 2-10 year yields neared an inversion, signalling worrying signs for the world economy. Investors will also eye the country’s retail sales for the month of July, scheduled to be released today by 12:30GMT for additional direction in the debt market. The yield on the benchmark 10-year Treasury yield suffered nearly 2-1/2 basis points to 1.559 percent, the super-long 30-year bond yields plunged nearly 4-1/2 basis points to 1.984 percent and the yield on the short-term 2-year traded 1-1/2 basis points lower at 1.563 percent. 

JGBs: The Japanese government bonds jumped Thursday on increased expectations the Bank of Japan (BoJ) will further ease monetary policy, on rising fears of a global economic downturn, with the U.S. 2s10s Treasury yield curve barely 2 basis points away from an inversion. The yield on the benchmark 10-year JGB note, which moves inversely to its price, plunged 23-1/2 basis points to -0.234 percent, the yield on the long-term 30-year suffered 4-1/2 basis points to 0.155 percent and the yield on short-term 2-year slumped nearly 28 basis points to -0.279 percent.

AUS: The Australian 10-year government bond yield hit a record low during Asian trading session Thursday, as signs of a global economic recession stampede investors’ risk appetite. This comes in despite a promising report of the country’s employment report for the month of July, released early today. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 5-1/2 basis points to 0.892 percent, the yield on the long-term 30-year bond plunged nearly 9-1/2 basis points to 1.457 percent while the yield on short-term 2-year traded flat at 0.735 percent.


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