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Europe Roundup: Sterling steadies near 2-month lows, euro falls below 1.1800 ahead of Jackson Hole meetings, European shares gain – Thursday, August 24, 2017

Market Roundup

  • EUR/USD -0.13%, USD/JPY 0.32%, GBP/USD 0.12%, EUR/GBP -0.27%
     
  • DXY 0.18%, DAX 0.38%, FTSE 0.4%, Brent -0.21%, Gold -0.27%
     
  • Great Britain GDP 2nd Release QQ Q2 0.3% vs 0.3%, 0.3% forecast
     
  • Great Britain GDP 2nd Release YY Q2 1.7% vs 1.7%, 1.7% forecast
     
  • Great Britain Business Invest QQ Prelim Q2 0.0% vs 0.6%, 0.4% forecast
     
  • Great Britain Business Invest YY Prelim Q2 0.0% vs 0.7%, 0.5% forecast
     
  • Markets eye the central banking conference in Jackson Hole
     
  • Gold eases ahead of Jackson Hole central bankers meet
     
  • ECB policymaker Hansson says not concerned about strength of euro – Bloomberg
     
  • China says will use all necessary means to defend interests against US trade probe
     
  • Mexico to introduce new inflation methodology in 2018
     
  • Oil steady as storm heads into the Gulf of Mexico

Economic Data Ahead

  • (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 6,000 to a seasonally adjusted 238,000 for the week ended Aug. 18 while continuing claims for the week ended Aug. 11 is expected to decline to 1.950 million from previous 1.953 million.
  • (0900 ET/1300 GMT) Mexico's annual inflation rate is expected to have increased 6.49 percent in the 12 months through mid-August, while core annual inflation rate is likely to have edged up to 0.22 percent in the first half of August.
  • (1000 ET/1400 GMT) National Association of Realtors is likely to report that U.S. existing home sales rose 0.9 percent to an annual rate of 557,000 million units in July.
  • (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending August 18.
  • (1100 ET/1500 GMT) Federal Reserve Bank of Kansas City issues manufacturing activity index for the month of August. The indicator stood at 4 in the previous month.
  • (1500 ET/1900 GMT) Argentina's economic activity is likely to have expanded 4.2 percent in June on an annual basis, as compared with a 3.3 percent increase in May.
  • N/A Bank of Mexico publishes the minutes of its latest monetary policy meeting.
  • (1830 ET/2230 GMT) Japan's Statistics Bureau will release its National Consumer Price Index for the month of July. The index rose at an annualized rate of 0.4 percent in June.

Key Events Ahead

  • N/A Top central bankers will meet for their annual get-together in Jackson Hole, Wyoming.

FX Beat

DXY: The dollar consolidated within narrow ranges across the board, ahead of an annual gathering of central bankers at Jackson Hole later in the day. The greenback against a basket of currencies traded 0.1 percent up at 93.28, having touched a high of 94.15 last week, it’s highest since July 26. FxWirePro's Hourly Dollar Strength Index stood at -22.08 (Neutral) by 1000 GMT.

EUR/USD: The euro declined, reversing some of its previous session losses, as investors remained cautious that the ECB Chief Draghi could hint towards QE tapering plans announcement during his Jackson Hole speech. The European currency traded 0.1 percent down at 1.1787, having touched a high of 1.1828 on Monday, its lowest since Aug. 14. FxWirePro's Hourly Euro Strength Index stood at 73.53 (Bullish) by 1000 GMT. On the lower side, near term support is around 1.16575 (23.6% retracement of 1.08930 and 1.19103) and any break below will drag the pair till 1.15985/1.1500. The near term resistance is around 1.1850 and any break above will take it till 1.19103 (Aug 8th 2017)/1.19391 (1.13% retracement of 1.19103 and 1.16880)/1.1200.

USD/JPY: The dollar rebounded from recent lows, as investors remained focused on a major central banker’s conference in Jackson Hole. The major was trading 0.2 percent up at 109.29, having hit a low of 108.60 on Friday, its lowest since Apr. 19 2016. FxWirePro's Hourly Yen Strength Index stood at -82.24 (Slightly Bearish) by 1000 GMT. The pair is facing minor resistance at 109.77 (daily Tenkan-Sen) and any convincing break above will take the pair till 110.20 (21- day EMA)/111.20 (100- day MA). The near term resistance is around 112 and any break above targets 112.98/114.

GBP/USD: Sterling steadied after falling to a near two-month low against the dollar as looming Brexit concerns combined with resurgent USD demand weighed down the British currency. The major traded 0.2 percent up at 1.2822, having hit a low of 1.2773 earlier, its lowest since June 26. FxWirePro's Hourly Sterling Strength Index stood at -13.88 (Neutral) by 1000 GMT. The downside capped by 38.2% fibo at 1.27739 and any break below 1.27739 will drag the pair down till 1.2700/1.2650 (200- day MA) likely. On the higher side, the minor jump can be seen only above 1.28770 (100- day MA) and any break above will take the pair till 1.2920/1.2955. Against the euro, the pound was trading 0.3 percent at 92.00 pence, having hit a fresh 10-month low of 92.36 the prior day.

USD/CHF: The Swiss franc rose, extending previous session gains after the US President Donald Trump threatened to shut down the government in order to secure funding for a proposed border wall with Mexico. The major trades 0.1 percent down at 0.9646, having touched a high of 0.9765 last week, it’s highest since Aug. 8. FxWirePro's Hourly Swiss Franc Strength Index stood at 29.00 (Neutral) by 1000 GMT. The pair is facing near term support at 0.95800 and any close below will drag the pair till 0.9550/0.9500/0.94370. On the higher side, upside capped at 0.9783 (38.2% retracement of 1.03432 and 0.94385) and any break above will take the pair till 0.9845/0.9900.

AUD/USD: The Australian dollar slumped to a 1-week low in response to increased nervousness heading into the 3-day Jackson Hole Symposium starting today. The Aussie trades flat at 0.7894, having hit a high of 0.7962 last week, it’s strongest since Aug. 04. FxWirePro's Hourly Aussie Strength Index stood at -79.20 (Slightly Bearish) by 1000 GMT. On the lower side, near term support is around 0.7800 and any break below will drag the pair till 0.7760 (61.8% fibo)/0.7688 (89- day EMA). The near term resistance is around 0.8070 and any break above targets 0.8100/0.8150.

Equities Recap

European shares rallied, strengthened by gains in cyclical sectors, while the dollar eased against the yen as caution prevailed on the day the annual Jackson Hole gathering of central bankers gets underway.

The pan-European STOXX 600 index advanced 0.5 percent to 375.75 points, while the FTSEurofirst 300 index climbed 0.5 percent to 1,476.93 points.

Britain's FTSE 100 trades 0.4 percent up at 7,409.28 points, while mid-cap FTSE 250 gained 0.02 percent to 19,747.08 points.

Germany's DAX rose 0.4 percent at 12,223.89 points; France's CAC 40 trades 0.3 percent higher at 5,132.68 points.

Commodities Recap

Crude oil prices declined, reversing some of its previous session gains, despite another fall in U.S. crude inventories. International benchmark Brent crude was trading 0.2 percent down at $52.42 per barrel by 1022 GMT, having hit a high of $52.93 on Friday, its strongest since Aug. 8. U.S. West Texas Intermediate was trading 0.3 percent at $48.18 a barrel, after rising as high as $48.71 last week, its highest since Aug. 14.

Gold prices tumbled, giving up some of its gains made after U.S. President Donald Trump's threat of a government shutdown, with investors remaining focused on a major central bankers conference in Jackson Hole. Spot gold fell 0.2 percent at $1,286.60 an ounce by 1025 GMT, after gaining 0.4 percent in the previous session. U.S. gold futures for December delivery slipped 0.2 percent to $1,292.40 per ounce.

Treasuries Recap

The U.S. Treasuries slumped on expectations of a rise in the country’s initial jobless claims for the week ended August 19, by about 6k to 238k, from the previous 232k in the last week. Also, markets remain focussed to observe the speeches from the upcoming Jackson Hole Symposium, scheduled to be held on August 24 for detailed direction into debt trading. The yield on the benchmark 10-year Treasury, rose 1 basis point to 2.18 percent, the super-long 30-year bond yields hovered around 2.75 percent and the yield on short-term 2-year note traded nearly a basis point higher at 1.32 percent.

The UK gilts traded tad lower despite witnessing an unchanged GDP for the second quarter of this year and as investors largely shrugged-off the downbeat reading of the country’s business investment. The yield on the benchmark 10-year gilts, rose 1 basis point to 1.06 percent, the super-long 30-year bond yields traded flat at 1.72 percent while the yield on the short-term 2-year hovered around 0.20 percent.

The German government bonds slumped Tuesday after the country’s manufacturing PMI surged during the month of August. Also, investors remained focussed to read the country’s second-quarter gross domestic product, scheduled to be released on August 25 by 06:00GMT. The German 10-year bond yields, which moves inversely to its price, jumped 1-1/2 basis points to 0.41 percent, the yield on 30-year note also climbed 1-1/2 basis points to 1.16 percent and the yield on short-term 2-year traded nearly 1 basis point higher at -0.71 percent.

The Japanese government bonds jumped Thursday as investors wait to watch the country’s consumer price inflation for the month of July, scheduled to be released today by 23:30GMT amid an otherwise muted trading session where participants are closely eyeing the Jackson Hole Symposium, starting today. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 0.03 percent, the yield on long-term 30-year also slipped 1 basis point to 0.82 percent and the yield on short-term 2-year traded nearly 1-1/2 basis points lower at -0.14 percent.

The New Zealand bonds ended Thursday’s session on a flat tone after the country’s trade balance surprised on the upside, against expectations of a deficit and as investors wait to watch the Jackson Hole Symposium, starting today for further direction in the bond market. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 4 basis points to 2.94 percent, the yield on 7-year note climbed 3-1/2 basis points to 2.79 percent while the yield on short-term 2-year ended 1 basis point lower at 2.07 percent.

The Australian bonds gained Thursday after the yield on 10-year U.S. Treasuries fell five basis points to 2.17 percent, the lowest closing level since June 26. Also, the markets wary ahead of the Federal Reserve’s Jackson Hole Economic Policy Symposium scheduled for this Friday in Wyoming. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell more than 3 basis points to 2.656 percent, the yield on 15-year note slid nearly 4 basis points to 2.951 percent and the yield on short-term 2-year dipped nearly 2 basis points to 1.837 percent.


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