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Europe Roundup: Euro off highs on ECB Guindos' comments; Swiss franc at 9-month peak, yen rallies after Trump signs new sanctions against Iran's supreme leader, gold at 6-year high – Tuesday, June 25th, 2019

Market Roundup

  • EUR/USD -0.1%, USD/JPY -0.29%, GBP/USD 0.12%, EUR/GBP -0.21%
     
  • DXY 0.03%, DAX -0.1%, FTSE -0.28%, Brent -0.69%, Gold 0.76%
     
  • Iran says U.S. sanctions on Khamenei mean end of diplomacy
     
  • UK's Johnson warns EU against any 'Napoleonic' tariffs in no-deal Brexit
     
  • Euro zone bank profitability may weaken on slowdown: ECB
     
  • Gold jumps to 6-year peak on weaker dollar, U.S.-Iran friction
     
  • UK retail sales slide in June at fastest pace since 2009 – CBI
     
  • China to launch first yuan bonds in casino hub Macau
     

Economic Data Ahead

  • (0830 ET/1230 GMT) Statistics Canada will release its wholesale trade figures for the month of April. The indicator is likely to have increased by 0.4 percent, after unexpectedly rising 1.4 percent in March.
     
  • (0900 ET/1300 GMT) The S&P/Case-Shiller is expected to report that U.S. home price index of 20 metropolitan areas rose at an annualized rate of 2.6 percent in April after posting a gain of 2.7 percent in the previous month.
     
  • (1000 ET/1400 GMT) The U.S. Conference Board is likely to show a decline in its consumer confidence index for the month of June to 131.2 from a final reading of 134.1 in May.
     
  • (1000 ET/1400 GMT) The U.S. new single-family home sales are expected to have increased 1.9 percent to a seasonally adjusted annual rate of 680,000 units in May. New home sales dropped 6.9 percent in April to a seasonally adjusted annual rate of 673,000 units.
     
  • (0900 ET/1400 GMT) The Federal Housing Finance Agency releases its housing price index for the month of April. The index is likely to rise 0.2 percent, after gaining 0.1 percent in March
     
  • (1000 ET/1500 GMT) Federal Reserve Bank of Richmond will publish it Manufacturing Index for June. The index posted a rise of 5 in the previous month.
     
  • (1630 ET/2030 GMT) API reports its weekly crude oil stock.
     

Key Events Ahead

  • N/A Russia's central bank monetary policy chief, Alexei Zabotkin, to speak at Duma in Moscow
     
  • (0830 ET/1230 GMT) Philadelphia Fed issues Nonmanufacturing Business Outlook Survey for June in Philadelphia
     
  • (0845 ET/1245 GMT) Federal Reserve Bank of New York President John Williams gives welcome remarks before the Open Finance Forum organized by Open Finance NYC and Bloomberg in New York
     
  • (1200 ET/1600 GMT) Federal Reserve Bank of Atlanta President Raphael Bostic participates in panel on “Housing” before the Harvard University Joint Center for Housing Studies' “The State of the Nation's Housing 2019,” in Atlanta
     
  • (1300 ET/1700 GMT) Federal Reserve Chair Jerome Powell speaks at “C. Peter McColough Series on International Economics: A Conversation with Jerome H. Powell,” in New York
     
  • (1315 ET/1715 GMT) ECB's Benoit Coeure gives opening remarks at a dinner with the International Swaps and Derivatives Association's (ISDA) Board of Directors and senior staff in Frankfurt
     
  • (1530 ET/1930 GMT) Federal Reserve Bank of Richmond President Tom Barkin takes part in a discussion at the University of Ottawa's Institute of Fiscal Studies and Democracy
     
  • (1830 ET/2230 GMT) Federal Reserve Bank of St. Louis President James Bullard gives a speech
     

FX Beat

DXY: The dollar index declined to a 3-month low, as selling pressure accelerated since the U.S. Federal Reserve signalled last week it would cut interest rates before year-end on mounting worries about an economic slowdown. The greenback against a basket of currencies traded 0.05 percent down at 95.98, having touched a low of 95.84 earlier, its lowest since Mar. 20. FxWirePro's Hourly Dollar Strength Index stood at -141.21 (Highly Bearish) by 1100 GMT.

EUR/USD: The euro retreated from a 3-month peak after European Central Bank Vice President Luis de Guindos stated that profitability across the eurozone bank sector is low and weakening growth could further dampen the sector's prospects. The European currency traded 0.2 percent down at 1.1379, having touched a high of 1.1412 earlier, its highest since Mar. 21. FxWirePro's Hourly Euro Strength Index stood at 71.37 (Bullish) by 1100 GMT. Immediate resistance is located at 1.1437 (Mar. 21 High), a break above targets 1.1474 (Dec. 21 High). On the downside, support is seen at 1.1345 (Feb 26 Low), a break below could drag it below 1.1301 (Jun. 11 Low).

USD/JPY: The dollar slumped to a near 6-month low amid rising tensions between the United States and Iran. Earlier in the day, Tehran said that new U.S. sanctions against Iran's supreme leader and foreign minister have closed the path to diplomacy between the two countries. Moreover, the prospect of monetary easing by the Federal Reserve further weakened the bid tone around the greenback. The pair was trading 0.2 percent down at 107.04, having hit a low of 106.78 earlier, its lowest since Jan. 3. FxWirePro's Hourly Yen Strength Index stood at 40.82 (Neutral) by 1100 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. consumer confidence, new home sales and speeches by Fed officials. Immediate resistance is located at 107.53 (38.2% retracement of 108.72 and 106.78), a break above targets 107.98 (61.8% retracement). On the downside, support is seen at 106.26 (Mar. 29, 2018), a break below could take it lower at 106.00.

GBP/USD: Sterling rallied to a 1-month peak as the greenback eased after the Federal Reserve encouraged expectations of a July rate cut. However, the upside remains limited as the risk of no-deal Brexit stemmed from the Conservative Party leadership contest. The major traded 0.05 percent up at 1.2740 having hit a high of 1.2766 on Monday, it’s highest since May 21. FxWirePro's Hourly Sterling Strength Index stood at 80.36 (Slightly Bearish) 1100 GMT. Immediate resistance is located at 1.2798 (May 17 High), a break above could take it near 1.2853 (May 16 High). On the downside, support is seen at 1.2681 (Jun. 12 Low), a break below targets 1.2628 (Jun. 20 Low). Against the euro, the pound was trading 0.1 percent up at 89.34 pence, having hit a high of 88.72 on Thursday, it’s highest since Jun. 7. 

USD/CHF: The Swiss franc jumped to a 9-month peak after U.S. President Donald Trump signed an executive order imposing sanctions on Iran's Supreme Leader Ayatollah Ali Khamenei and other top officials.  The major trades 0.5 percent up at 0.9771, having touched a low of 0.9693 earlier; it’s lowest since Sept. 25. FxWirePro's Hourly Swiss Franc Strength Index stood at -16.29 (Neutral) by 1100 GMT. On the higher side, near-term resistance is around 0.9817 (38.2% retracement 1.0014 and 0.9693) and any break above will take the pair to next level till 0.9893 (61.8% retracement). The near-term support is around 0.9635 (Sept. 25), and any close below that level will drag it till 0.9600 (Sept. 18 Low).

Equities Recap

European shares tumbled, weighed down by losses in the technology sector, while Middle East tensions and doubts about the chances of progress in U.S-China trade talks this week dented risk-sentiment.

The pan-European STOXX 600 index slumped 0.1 percent at 383.34 points, while the FTSEurofirst 300 tumbled 0.1 percent to 1,510.02 points.

Britain's FTSE 100 trades 0.2 percent down at 7,399.79 points, while mid-cap FTSE 250 eased 0.3 to 19,241.39 points.

Germany's DAX eased 0.05 percent at 12,266.32 points; France's CAC 40 trades 0.2 percent lower at 5,511.47 points.

Commodities Recap

Crude oil prices slumped, weighed down by concerns over declining crude demand and a Saudi pledge to offset any shortfall from countries hit by sanctions. International benchmark Brent crude was trading 0.5 percent lower at $64.45 per barrel by 1052 GMT, having hit a high of $65.74 on Friday, its highest since May 31. U.S. West Texas Intermediate was trading 0.3 percent down at $57.59 a barrel, after rising as high as $58.20 on Monday, its highest since the May 30.

Gold prices rallied to a 6-year peak as the dollar weakened on prospects of monetary easing by the U.S. Federal Reserve, while simmering U.S.-Iran tensions continued to dent investor sentiment. Spot gold was trading 0.8 percent at $1,429.94 per ounce by 1055 GMT, having touched a high of $1,439.14, its highest since May 14, 2013 and has gained 9.6 percent so far this month. U.S. gold futures jumped 1.1 percent to $1,436.20 an ounce.

Treasuries Recap

The U.S. Treasuries gained during the afternoon session, ahead of a speech by Jerome Powell, the Governor of the Federal Reserve, scheduled to be delivered today by 17:00GMT, besides, a host of speeches by other members of the FOMC – Williams, Barkin and Bullard, also due later today. The yield on the benchmark 10-year Treasury yield slipped 1 basis point to 2.009 percent, the super-long 30-year bond yields suffered nearly 1-1/2 basis points to 2.536 percent while the yield on the short-term 2-year traded flat at 1.732 percent.

The German bunds traded mixed during European trading session ahead of the country’s and eurozone’s consumer price inflation (CPI) data for the month of June, scheduled to be released on June 27 and 28 by 12:00GMT and 09:00GMT respectively. The German 10-year bond yields, which move inversely to its price, slipped 1 basis point to -0.318 percent, the yield on 30-year note hovered around 0.254 percent and the yield on short-term 2-year traded 1 basis point higher at -0.724 percent.

The Japanese government bonds closed higher as investors remain worried over the United States’ military sanctions on Iran, that pushed demand for safe-haven assets ahead the trade talks between the U.S. and China, scheduled to be held at the G-20 Osaka Summit in Japan this weekend. At close, the yield on the benchmark 10-year JGB note, which moves inversely to its price, plunged 15-1/2 basis points to -0.154 percent, the yield on the long-term 30-year edged 2 basis points lower to 0.329 percent and the yield on short-term 2-year plummeted nearly 23 basis points to -0.227 percent

The Australian government bonds jumped during Asian trading session tracking a similar movement in the United States Treasuries amid a muted day that witnessed data of little economic significance as investors wait to watch the scheduled trade talks between President Donald Trump and Chinese leader Xi Jinping at the G-20 meeting in Osaka, Japan. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 2-1/2 basis points to 1.266 percent, the yield on the long-term 30-year bond plunged nearly 3-1/2 basis points to 1.878 percent and the yield on short-term 2-year slipped nearly 1 basis point to 0.900 percent.


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