News

Europe Roundup: Sterling eases from 1-week high, dollar rebounds from 2-week lows ahead of Fed officials' speeches, European shares gain – Thursday, October 12th, 2017

Market Roundup

  • EUR/USD -0.03%, USD/JPY -0.12%, GBP/USD -0.31%, EUR/GBP 0.26%
     
  • DXY 0.05%, DAX -0.03%, FTSE 0.18%, Brent -0.9%, Gold 0.23%
     
  • EZ Aug Industrial Production YY 3.8% vs 3.2%, forecast 2.6%, revised 3.65%
     
  • UK small businesses not changing plans in face of Brexit – survey
     
  • Banks filling London staffing gaps before Brexit – Hays
     
  • Great Britain Sept RICS Housing Survey 6 vs 4, forecast 4
     
  • Germany Oct TR IPSOS PCSI 58.02 vs 57.13
     
  • Great Britain Oct TR IPSOS PCSI 49.20 vs 47.78
     
  • U.S. House to vote on $36.5 billion disaster relief package
     
  • Trump expected to sign order side-stepping Obamacare rule

Economic Data Ahead

  • (0830 ET/1230 GMT) The U.S. producer price index is likely to have increased 0.4 percent in September, while in the 12 months through the same period, it is expected to have advanced 2.5 percent. PPI excluding food and energy probably edged up 0.2 percent after rising 0.1 in August.
     
  • (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 9,000 to a seasonally adjusted 251,000 for the week ended Oct. 6, while continuing claims for the week ended Sept. 26 is expected to decline to 1.935 million from previous 1.938 million.
     
  • (0830 ET/1230 GMT) The Statistics Canada releases its New Housing Price Index (NHPI) for the month of August. The index rose 0.4 percent in July.
     
  • (0900 ET/1300 GMT) Mexico's industrial output is likely to rise 0.4 percent in August after recording a 1 percent drop in July.
     
  • N/A Bank of Mexico publishes the minutes of its latest monetary policy meeting.
     
  • (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending October 6.
     
  • (1100 ET/1500 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending October 6.
     
  • (1400 ET/1800 GMT) The U.S. reports its monthly budget statement for the month of September. The government is likely to show a budget surplus of $6 billion after posting a deficit of $108 billion in the previous month.
     
  • (1730 ET/2130 GMT) New Zealand will release its Business PMI index for the month of September. The index stood at 57.9 in the previous month. 
     
  • (1950 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending October 6.
     
  • (1950 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending October 6.

Key Events Ahead

  • N/A The fourth round of talks to renegotiate the North American Free Trade Agreement (NAFTA) continues between Canada, U.S., and Mexico at a hotel in Arlington, Virginia.
     
  • (0930 ET/1330 GMT) Bank of England MPC Member Andrew G Haldane's Speech in Washington.
     
  • (1030 ET/1430 GMT) Federal Reserve Board Governor Jerome Powell speaks on “Prospects for Emerging Market Economies in a Normalizing Global Economy” before the Institute for International Finance Spotlight on Emerging Markets event in Washington.
     
  • (1030 ET/1430 GMT) Federal Reserve Board Governor Lael Brainard participates in “Monetary Policy” panel before the Peterson Institute Conference on Rethinking Monetary Policy in Washington.
     
  • (1030 ET/1430 GMT) European Central Bank President Mario Draghi speaks before a panel on monetary policy at the Peterson Institute in Washington.
     
  • (1030 ET/1430 GMT) European Central Bank's chief economist Peter Praet speaks on “Euro Zone: Will the European Recovery Continue?” at the JPMorgan Investor Seminar in Washington.
     
  • (1145 ET/1545 GMT) FedTrade operation 30-year Fannie Mae and Freddie Mac (max $2.2 bn)
     
  • N/A International Monetary Fund Managing Director Christine Lagarde and World Bank President Jim Yong Kim hold G20 news conferences in Washington.
     
  • (1515 ET/1915 GMT) Bank of Canada Senior Deputy Governor Carolyn Wilkins will participate on a panel discussing the future of paper currency at the annual meeting of the Institute of International Finance in Washington.
     
  • (1600 ET/2000 GMT) European Central Bank's Executive Board member Benoît Cœuré's speech.
     
  • (1610 ET/2010 GMT) European Central Bank's Executive Board member Sabine Lautenschläger speech.

FX Beat

DXY: The dollar index rebounded after falling to 2-week lows as investors awaited series of Fed officials' speeches for further clues on the central bank's monetary policy outlook. The greenback against a basket of currencies traded 0.1 percent up at 93.05, having touched a low of 92.80 earlier, its lowest since Sept. 26. FxWirePro's Hourly Dollar Strength Index stood at -40.31 (Neutral) by 1000 GMT.

EUR/USD: The euro rose to a two-week high after better-than-expected Eurozone industrial production figures supported growing expectations that the European Central Bank will announce a plan to wind down its huge stimulus plan at a policy meeting later this month. The European currency traded flat at 1.1854, having touched a high of 1.1879 earlier, its highest since Sept. 26. FxWirePro's Hourly Euro Strength Index stood at 109.48 (Highly Bullish) by 1000 GMT. On the higher side, near-term resistance is around 1.1863 (233- 4H MA) and any break above will take the pair to next level till 1.1900/1.19280 (61.8% retracement of 1.20925 and 1.16621).  The near-term support is around 1.1780 (55- H EMA) and any break below will drag it down till 1.1755 (233- H MA)/1.17370 (61.8% retracement of 1.16620 and 1.18448)/1.1720.

USD/JPY: The dollar declined against the Japanese yen, as investors digested the overnight release of the dovish minutes of the FOMC latest policy meeting. Additionally, a drop in the on the benchmark 10-year U.S. Treasury undermined the bid tone around the pair. The major was trading 0.1 percent down at 112.39, having hit a low of 111.99 on Tuesday, its lowest since Sept. 26. FxWirePro's Hourly Yen Strength Index stood at -92.80 (Slightly Bearish) by 1000 GMT. On the lower side, any close below 112 confirms minor weakness, a decline till 111.13/110 likely. Any break above 113.45 confirms minor bullishness, a jump till 114/114.50.

GBP/USD: Sterling edged down after rising to a 1-week high earlier in the session, following the release of Bank of England's Q3 credit conditions survey, which showed lenders anticipating a sharp decline in consumer credit availability in the next three month. Sterling traded 0.1 percent down at 1.3212, having hit a high of 1.3265 earlier, its highest since Sept. 6. FxWirePro's Hourly Sterling Strength Index stood at 12.16 (Neutral) by 1000 GMT. The near-term strong resistance is around 1.3300 and any break above will take the pair to next level till 1.3350/1.3400. On the lower side, near-term support is around 1.3160 and any break below will drag it to next level till 1.3130/1.3075. Against the euro, the pound was trading 0.3 low at 89.92 pence, having hit a low of 90.00 pence, its lowest since Sept. 14.

USD/CHF: The Swiss franc retreated from a 1-week low as the prevalent risk-on environment supported the bid tone around the greenback. The major trades 0.2 percent up at 0.9749, having touched a low of 0.9712 earlier, it’s lowest since Oct. 4. FxWirePro's Hourly Swiss Franc Strength Index stood at -84.55 (Slightly Bearish) by 1000 GMT. On the lower side, 0.9700 (20- day MA) will be acting as major support and any break below will drag the pair to next level till 0.9640 (Sep 25th, 2017 low)/0.9580. The near-term resistance is around 0.9770 (support turned into resistance) and any break above will take it to next level till 0.9808/0.9845.

AUD/USD: The Australian dollar advanced to a 1-week peak after domestic consumer inflation expectations rose 4.3 percent in October from previous 3.8 percent. The Aussie trades 0.4 percent up at 0.7815, having hit a high of 0.7835 earlier, it’s highest since Oct. 5. FxWirePro's Hourly Aussie Strength Index stood at 36.06 (Neutral) by 1000 GMT. On the lower side, near-term support is around 0.7730 and any convincing close below will drag the pair till 0.77186/0.7685. The near-term resistance is around 0.7825 (89 D- EMA) and any break above targets 0.7878 (34- day EMA).

Equities Recap

European shares rose, following record highs in Asia and on Wall Street, while the greenback rebounded from 2-week lows as the FOMC minutes left doors open for a December rate hike action.

The pan-European STOXX 600 index gained 0.07 percent to 390.44 points, while the FTSEurofirst 300 index advanced 0.01 percent to 1,533.92 points.

Britain's FTSE 100 trades 0.1 percent up at 7,543.42 points, while mid-cap FTSE 250 rose 0.1 percent to 20,191.72 points.

Germany's DAX rose 0.06 percent at 12,978.73 points; France's CAC 40 trades 0.1 percent down at 5,356.06 points.

Commodities Recap

Crude oil prices declined, after rising for three consecutive sessions as U.S. fuel inventories rose despite efforts by OPEC to cut production. International benchmark Brent crude was trading 0.05 percent down at $56.60 per barrel by 1015 GMT, having hit a low of $55.04 on Monday, its weakest since Sept. 19. U.S. West Texas Intermediate was trading 0.3 percent lower at $50.83 a barrel, after falling as low as $49.11 on Monday, its lowest since Sept. 13.

Gold prices rose to their highest in two weeks as the dollar eased after minutes from the Federal Reserve's latest policy meeting showed the U.S. central bank was concerned over low inflation. Spot gold rose 0.3 percent at $1,294.30 an ounce by 1018 GMT, having touched its highest level since Sept. 27 at $1,297.31 earlier in the session. U.S. gold futures for December delivery climbed 0.6 percent to $1,297.20 per ounce.

Treasuries Recap

The U.S. Treasuries remained tad higher as investors wait to watch a host of speeches by Federal Open Market Committee (FOMC) members through the day. Members Brainard and Powell are scheduled to speak today by 14:30GMT respectively. The yield on the benchmark 10-year Treasury slipped nearly 1 basis point to 2.34 percent, the super-long 30-year bond yields hovered around 2.87 percent and the yield on short-term 2-year note also traded close to 1 basis point higher at 1.51 percent.

The UK gilts gained momentum as investors poured into safe-haven assets, following timid progress over the fifth round of Brexit negotiations that cast a shadow over the fate of the British economy. The yield on the benchmark 10-year gilts, plunged nearly 2 basis points to 1.36 percent, the super-long 30-year bond yields also slumped close to 2 basis points to 1.93 percent and the yield on the short-term 2-year also traded 1-1/2 basis points lower at 0.45 percent.

The German bunds flat Thursday after investors largely shrugged off the rise in eurozone’s industrial production for the month of August. The German 10-year bond yields, which move inversely to its price, remained tad lower at 0.45 percent, the yield on 30-year note range-bound at 1.25 percent and the yield on short-term 2-year traded flat at -0.69 percent.

The New Zealand bonds ended Thursday’s session on a higher note after the Federal Reserve policymakers remained concerned over the sluggish pace of inflation in the economy. However, the upside was limited after members continued to signal the possibility of a third rate hike this December. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 3.00 percent, the yield on 7-year note also slipped 1 basis point to 2.83 percent and the yield on short-term 2-year too ended a basis point lower at 2.08 percent

The Japanese government bonds traded range-bound Thursday as investors remained side-lined in any major trading activity amid lack of significant economic data. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.06 percent, the yield on long-term 30-year tad lower at 0.87 percent and the yield on short-term 2-year traded flat at -0.14 percent.

The Australian bonds tilted slightly on the upside tracking similar movement in the U.S. Treasuries after the Federal Reserve policymakers remain largely divided over the inflation outlook of the country and the path of rate hikes in the economy. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.83 percent, the yield on the 15-year note also slid 1 basis point to 3.11 percent and the yield on short-term 2-year traded flat at 1.95 percent.


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