Europe Roundup: Sterling firms above 2-1/2 month lows vs dollar, European shares hit record high,Gold eases, Oil rises 2%-February 12th,2020

Market Roundup

• EU Dec Industrial Production (YoY)  -4.1%,-2.3% forecast, -1.7%   previous

• EU Dec Industrial Production (MoM)  -2.1%,-1.6% forecast, 0.2% previous

• Portuguese Jan CPI (YoY)  0.8% , 0.8% forecast, 0.4% previous

• Portuguese Jan CPI (MoM)  -0.8%,-0.9% forecast, -0.1%  previous

Looking Ahead – Economic Data (GMT)

• 15:30 US Crude Oil Inventories 2.987M, 3.355M previous
• 15:30 US Gasoline Inventories    0.546M, -0.091M previous

• 16:00 US Feb Thomson Reuters IPSOS PCSI  63.42 previous|

• 17:30 Brazil Foreign Exchange Flows -0.384B previous    

• 19:00 US Jan Federal Budget Balance  -11.5B, -13.3B previous    

Looking Ahead – Events, Other Releases (GMT)        

• 15;00 US Fed Chair Powell Testifies  

EUR/USD: The euro edge lower against the U.S. dollar on Wednesday, as  coronavirus cases and the Federal Reserve chairman’s optimistic view of the economy lifted greenback.  China reported its lowest number of new coronavirus cases since late January. Those reports encouraged investors to get back into riskier assets at the expense of bonds, gold and the Japanese yen. The euro was down 0.02 percent at $1.10914. Immediate resistance can be seen at 1.0936  (5 DMA), an upside break can trigger rise towards 1.0984 (9 DMA).On the downside, immediate support is seen at 1.0900 (Psychological level), a break below could take the pair towards 1.0886 (Feb 11st low).

GBP/USD: Sterling was a touch firmer against dollar on Wednesday, holding its ground against other major currencies in the absence of any major economic data or news related to trade talks with the European Union. The pound has inched away from 2-1/2-month lows hit against the dollar at the start of the week, winning some respite on Tuesday thanks to economic growth data. Preliminary data for fourth-quarter gross domestic product showed the economy grew 1.1% year-on-year, the same as in the previous quarter, and more strongly than economists had forecast. Immediate resistance can be seen at 1.2987 (9 DMA), an upside break can trigger rise towards 1.3024 (21 DMA).On the downside, immediate support is seen at 1.2871 (Lower BB), a break below could take the pair towards 1.2886 (50 DMA).

USD/CHF: The dollar edged lower against the Swiss franc on Wednesday, as worries about the eventual fallout from coronavirus and rising death toll kept investors cautious. Worries about the eventual fallout have prompted a big selldown in currencies exposed to China, from the tourism-sensitive Thai baht to the oil-export driven Norwegian krone. The Swiss franc, a barometer of risk sentiment by virtue of its safe-haven status, remains strong against most majors and was steady at 0.9750 per dollar.. Immediate resistance can be seen at 0.9788(Higher BB), an upside break can trigger rise towards 0.9800 (Psychological level).On the downside, immediate support is seen at 0.9722 (9 DMA), a break below could take the pair towards 0.9700 (Psychological level).

USD/JPY: The dollar strengthened against the Japanese yen on Wednesday, as dollar demand increased   amid hopes the spread of the coronavirus had slowed.  Across mainland China 2,015 new cases of coronavirus were confirmed as of Tuesday, the lowest daily rise since Jan. 30. China’s senior medical adviser also said the outbreak might be over by April.The slowdown in the number of new cases encouraged investors to resume seeking greenback. Strong resistance can be seen at 110.02 (7th Feb high), an upside break can trigger rise towards 110.58 (Higher BB).On the downside, immediate support is seen at 109.86 (5 DMA), a break below could take the pair towards 109.53 (9 DMA). 

Equities Recap

European shares hit a record high for the second straight session on Wednesday, as a drop in new coronavirus cases prompted buying in China-focused stocks, even as investors remained wary of the epidemic’s economic impact.

At (GMT 12:50),UK's benchmark FTSE 100 was last trading higherat 0.82 percent, Germany's Dax was up by 0.32 percent, France’s CAC finished was up by 0.51percent.

Commodities Recap

Gold prices edged lower on Wednesday as new coronavirus cases fell and risk appetite improved, although uncertainty over the economic impact of the outbreak still underpinned bullion.

Spot gold   edged 0.2% lower to $1,564.15 per ounce by 0818 GMT. U.S. gold futures were down 0.2% at $1,567.50.

Oil prices extended gains on Wednesday as China reported its lowest daily number of new coronavirus cases since late January, stoking investor hopes that fuel demand in the world’s second-largest oil consumer may begin to recover from the epidemic.

Brent crude  was up $1.13, or 2.1%, at $55.14 per barrel at 1118 GMT. U.S. West Texas Intermediate (WTI)  rose 82 cents, or 1.64%, to $50.76 a barrel.

Treasuries Recap

U.S.: The U.S. Treasuries lost ground during Wednesday's afternoon session ahead of Federal Open Market Committee (FOMC) Chair Jerome Powell’s testimony, scheduled to be delivered today by 15:00GMT, besides, the 10-year auction and crude oil inventory data, all due later today. The yield on the benchmark 10-year Treasury yield jumped 2 basis points to 1.611 percent, the super-long 30-year bond yield also gained 2 basis points to trade at 2.071 percent and the yield on the short-term 2-year surged nearly 1-1/2 basis points to 1.430 percent.

EUR: The German bunds remained flat during afternoon session Wednesday as investors reacted dull amid a slow trading day that witnessed data of little economic significance. However, the country’s gross domestic product (GDP) for the fourth quarter of 2019 is keenly eyed, due to be released on Valentine’s Day, along with a host of 2-tier economic data from the eurozone, including Q4 GDP, employment report and December trade balance data. The German 10-year bond yield, which move inversely to its price, hovered around -0.377 percent, the long-term 30-year yield edged tad nearly 1 basis point up to 0.145 percent and the yield on short-term 2-year remained flat at -0.641 percent.

AUS: The Australian bonds slumped during early trading hours Wednesday, as investors started to find some mid-week respite following the improvement in Coronavirus situation, further affirmed by Federal Reserve Chair Jerome Powell’s speech, delivered late in the overnight session. Mr Powell stated that the current monetary policy stance is apt to support economic growth, a solid labour market and inflation returning to the Fed’s target range; however, eyes still remain on the deadly virus, its further spill-over impact and recovery that shook China to the core. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped 4-1/2 basis points to 1.086 percent, the yield on the long-term 30-year bond also surged 4-1/2 basis points to 1.675 percent and the yield on short-term 2-year gained nearly 3 basis points to trade at 0.776 percent.

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