News

Europe Roundup: Euro rallies on Franco-German proposal for recovery fund, European shares dips, Gold edges higher, Oil gains on signs of output cuts, improved demand-May 19th,2020

Market Roundup

• Encouraging vaccine trial offers hope in pandemic battle

• Risk sentiment improves in FX, stocks, commodities

• UK March Unemployment Rate 3.9%,4.4% forecast, 4.0% previous

• UK March Average Earnings Index +Bonus 2.4%,2.6% forecast, 2.8% previous

• UK March Average Earnings ex-Bonus 2.7%,2.6% forecast, 2.9% previous

• Italian April Car Registration (MoM) -84.9%,-82.6% previous

• Italian April Car Registration (YoY) -97.6%, -85.4% previous

• UK Labour Productivity -1.1%,0.3% previous

• UK March Employment Change 3M/3M (MoM) 211K, 50K forecast, 172K previous

• UK April Car Registration (YoY) -97.3%,-44.4% previous

• UK April Car Registration (MoM) -98.3%,220.0% previous

• French April Car Registration (YoY) -88.8%,-72.2% previous

• French April Car Registration (MoM) -66.5%, -37.7% previous

• UK April Claimant Count Change 856.5K, 676.5K forecast, 12.1K previous

• German April Car Registration (MoM) -43.8%,-10.3% previous

• German May ZEW Economic Sentiment 51.0, 32.0 forecast, 28.2 previous

• EU May ZEW Economic Sentiment 46.0, 25.2 previous

Looking Ahead Economic Data

• 12:30 US April Building Permits 1.000M forecast, 1.350M previous

• 12:30 US April Building Permits (MoM) -7.0% previous

• 12:30 US April Housing Starts 0.927M forecast, 1.216M previous

• 12:30 US April Housing Starts (MoM) -22.3% previous

• 12:55 US Redbook (YoY) -7.5% previous

• 12:55 US Redbook (MoM) -1.5% previous

• 13:00 Russia GDP Quarterly (YoY) (Q1) 1.9% forecast, 1.5% previous

• 15:20 New Zealand GlobalDairyTrade Price Index -0.8% previous

Looking Ahead – Events, Other Releases (GMT)

• 14:00 US FOMC Member Kashkari Speaks

• 14:00 US Fed Chair Powell Testifies

• 18:00 US FOMC Member Rosengren Speaks

Fxbeat

EUR/USD: The euro strengthened against dollar on Tuesday as euro was boosted after Franco-German proposal on Monday for a fund that would offer grants to European Union regions and sectors hit hardest by the coronaries pandemic. The common currency was also buoyed by a weaker dollar, which lost its safe-haven appeal after encouraging results from the trial of a vaccine for COVID-19.Germany and France, whose agreements usually pave the way for broader EU deals, proposed that the European Commission borrow the 500 billion euros ($546.90 billion) on behalf of the whole EU. Immediate resistance can be seen at 1.0965 (Higher BB), an upside break can trigger rise towards 1.0980 (61.8% fib).On the downside, immediate support is seen at 1.0914 (50% fib), a break below could take the pair towards 1.0897(50 DMA).

GBP/USD: Sterling strengthened against dollar on Tuesday, recovering somewhat from seven-week lows but not fully participating in a market-wide relief rally from improving risk appetite. But downside risks continue to weigh on the pound. The market has started to price in the possibility of negative interest rates. The pound had slipped below $1.21 against the dollar on Monday. It hit a low of $1.2185 around 0320 GMT on Tuesday before recovering to as much as $1.2247 in late European session. It was last at $1.2243. Immediate resistance can be seen at 1.2266 (50 % fib), an upside break can trigger rise towards 1.2350 (61.8 % fib).On the downside, immediate support is seen at 1.2179 (38.2 %fib), a break below could take the pair towards 1.2199 (Lower BB).

USD/CHF: The dollar declined against the Swiss franc on Tuesday after encouraging data from the trial of a vaccine for COVID-19 reduced safe-haven demand for the greenback. Dollar dipped after encouraging data from a COVID-19 vaccine trial by U.S. drugmaker after encouraging data from a COVID-19 vaccine trial by U.S. drugmaker Moderna added to the optimism as more governments scale back lockdown restrictions. Moderna added to the optimism as more governments scale back lockdown restrictions. Immediate resistance can be seen at 0.9725 (23.6% fib), an upside break can trigger rise towards 0.9788 (Higher BB).On the downside, immediate support is seen at 0.9681 (50 DMA), a break below could take the pair towards 0.9637 (Lower BB).

USD/JPY: The dollar rose against the Japanese yen Tuesday after encouraging data from an early-stage trial for a coronavirus vaccine lifted market sentiment. U.S. equities rallied on Monday after drugmaker Moderna Inc’s experimental COVID-19 vaccine appeared safe and showed promise in a small group of healthy volunteers, according to very early data. However, gains were limited as wary investors awaited further information on the potential vaccine, given that various compounds and medicines touted as cures have failed to deliver in the past two months. Strong resistance can be seen at 107.70 (50 DMA), an upside break can trigger rise towards 107.94 (Higher BB).On the downside, immediate support is seen at 107.08(21 DMA), a break below could take the pair towards 106.55 (50% fib ).

Equities Recap

European shares pulled back on Tuesday after a rally in the previous session, with losses in healthcare, and construction and engineering firms countering optimism from fresh stimulus plans for the European Union.

At (GMT 12:00 ),UK’s benchmark FTSE 100 was last trading down at 0.33 percent, Germany’s Dax was down by 0.19 percent, France’s CAC finished was down by 0.47 percent.

Commodities Recap

Gold prices rose on Tuesday, supported by fears of a global recession and fallout from central banks’ stimulus measures, while an uptick in risk-appetite after a positive report about a potential COVID-19 vaccine limited bullion’s advance.

Spot gold was up 0.2% at $1,734.66 per ounce by 0944 GMT. U.S. gold futures rose 0.1% to $1,736.60.

Oil prices rose slightly on Tuesday amid signs that producers are cutting output as promised just as demand picks up, stoked by more countries easing out of curbs imposed to counter the coronavirus pandemic.

Benchmark Brent crude climbed 7 cents, or 0.2%, to $34.88 a barrel by 0907 GMT, after earlier touching its highest since April 9.U.S. West Texas Intermediate crude was up 70 cents, or 2.2%, at $32.52 a barrel.

Treasuries Recap

Southern European government bond yields fell heavily on Tuesday after France and Germany proposed a 500 billion euro ($547 billion) recovery fund offering grants to regions hit hardest by the coronavirus pandemic.

The Spanish 10-year yield fell 10 basis points to 0.692%, its lowest since April 1, while Portuguese bond yields declined to their lowest since March 31, down 14 bps on the day at 0.764%.

Italian yields fell across maturities. The 10-year yield fell 9 basis points to 1.599% at one point, its lowest since April 9.


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