News

Europe Roundup: Sterling rises amid Brexit transition deal concerns, euro gains on improving risk sentiment, European shares near 2-week peak – Monday, March 12th, 2018

Market Roundup

  • ECB's Coeure says sees short-term interest rates staying at “very low levels”
     
  • ECB's Coeure says inflation is not yet where we want it to be in Euro zone
     
  • Canadian Finance Minister Morneau says we are cautiously optimistic that we can get there on NAFTA
     
  • Canadian Finance Minister Morneau says increasing trade barriers are a continuing concern for G20
     
  • Canadian Finance Minister Morneau says hopes to have at least as good a trade arrangement with UK after Brexit as it does today
     
  • Canadian finance minister Morneau says sees parallels between Brexit process and uncertainty about NAFTA
     
  • Norway's finance ministry says sees mainland GDP growth 2.5 pct in 2018, 2.6 pct in 2019
     
  • Polish C. bank says sees core CPI at 1.6 pct in 2018, 2.6 pct in 2019, and 3.0 pct in 2020
     
  • Polish C. bank sees GDP growth at 4.2 pct in 2018, 3.8 pct in 2019, 3.6 pct in 2020

Economic Data Ahead

  • (1400 ET/1800 GMT) The U.S. reports its monthly budget statement for the month of February. The government is likely to show a budget deficit of $222.6 billion after posting a surplus of $49.0 billion in the previous month.

Key Events Ahead

  • No significant event scheduled

FX Beat

DXY: The dollar index extended previous session losses after data showed U.S. annual growth in average hourly earnings slowed to 2.6 percent after a spike in January. The greenback against a basket of currencies 0.05 percent down at 90.08, having touched a high of 90.36 on Friday, its highest since Mar. 1. FxWirePro's Hourly Dollar Strength Index stood at 89.41 (Slightly Bullish) by 1000 GMT.

EUR/USD: The euro consolidated within narrow ranges as investors focus shifted on a meeting of the eurozone finance ministers, for comments on trade protectionism after President Donald Trump's decision to impose some tariffs. The European currency traded 0.05 percent up at 1.2309, having touched a high of 1.2460 on Thursday, its highest since Feb. 16. FxWirePro's Hourly Euro Strength Index stood at -136.39 (Highly Bearish) by 1000 GMT. Immediate resistance is located at 1.2353 (5-DMA), a break above targets 1.2465 (Feb 14 High). On the downside, support is seen at 1.2273 (Previous Session Low), a break below could drag it lower 1.2221.

USD/JPY: The dollar declined, retreating from an over 1-week high touched in the previous session as the strong U.S. job growth data released on Friday was counterbalanced by slower increases in wages. The major was trading 0.3 percent down at 106.53, having hit a high of 107.04 on Friday, its highest since Mar. 1. FxWirePro's Hourly Yen Strength Index stood at 89.41 (Slightly Bullish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. monthly budget statement. Immediate resistance is located at 107.20 (Mar 1), a break above targets 107.67 (Feb. 27). On the downside, support is seen at 105.89, a break below could take it lower 105.25.

GBP/USD: Sterling extended gains for the second straight session, amid worries that Britain and EU officials would fail to secure a transition arrangement at a March 22-23 summit as differences grew in recent days. The major traded 0.05 percent up at 1.3855, having hit a high of 1.3929 last week, it’s highest since Feb 27. FxWirePro's Hourly Sterling Strength Index stood at -54.47 (Bearish) by 1000 GMT. Immediate resistance is located at 1.3905 (21-DMA), a break above could take it near 1.3996. On the downside, support is seen at 1.3781 (Mar. 8 Low), a break below targets 1.3711 (Mar. 1 Low). Against the euro, the pound was trading flat at 88.84 pence, having hit a low of 89.67 pence on Wednesday, it’s lowest since Nov. 28, 2017.

USD/CHF: The Swiss franc edged up after falling to a 1-1/2 month low in the previous session, as the greenback slightly eased on mixed details from US monthly jobs report. The major trades 0.2 percent down at 0.9497, having touched a high of 0.9534 on Friday, it’s highest since Jan. 24. FxWirePro's Hourly Swiss Franc Strength Index stood at -127.00 (Highly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 0.9550 and any break above will take the pair to next level till 0.9581. The near-term support is around 0.9453 (5-DMA) and any close below that level will drag it till 0.9377 (21-DMA).

Equities Recap

European shares rose to their highest level in almost two weeks, strengthened by gains among German utilities, while the greenback eased from an over 1-week peak on mixed details from US monthly jobs report.

The pan-European STOXX 600 index advanced 0.3 percent to 379.27 points, while the FTSEurofirst 300 index gained 0.3 percent to 1,483.16 points.

Britain's FTSE 100 trades 0.05 percent lower at 7,222.35 points, while mid-cap FTSE 250 surged 0.1 percent to 20,107.58 points.

Germany's DAX rose 0.8 percent at 12,439.58 points; France's CAC 40 trades 0.3 percent up at 5,287.13 points.

Commodities Recap

Crude oil prices declined, reversing some of its previous session gains on expectations that U.S. output will rise this year. International benchmark Brent crude was trading 0.8 percent up at $64.94 per barrel by 0945 GMT, having hit a low of $63.41 on Thursday, its lowest since Mar. 2. U.S. West Texas Intermediate was trading 0.8 percent down at $61.63 a barrel, after falling as low as $59.99 on Thursday, its weakest since Feb. 15.

Gold prices declined, weighed down by a stronger equity market, with the latest U.S. jobs report easing fears of inflation and faster U.S. rate hikes. Spot gold edged lower 0.3 percent to $1,319.08 per ounce at 0953 GMT, having hit $1,312.70 an ounce on Friday, its lowest since Mar. 1. U.S. gold futures for April delivery fell 0.1 percent to $1,322.60 per ounce.

Treasuries Recap

The U.S. Treasuries climbed ahead of the 10-year auction, scheduled to be held today by 17:00GMT and the country’s consumer price inflation index for the month of February, due on March 13 by 12:30GMT. The yield on the benchmark 10-year Treasuries rose 1 basis point to 2.90 percent, the super-long 30-year bond yields hovered around 3.16 percent and the yield on the short-term 2-year traded tad higher at 2.27 percent.

The UK gilts traded range-bound in a silent week that is deemed to witness little data of any economic significance, instead, the main event of the week will be the Chancellor’s Spring Statement, and the first such announcement since the main Budget was moved to the autumn. The yield on the benchmark 10-year gilts, hovered around 1.49 percent, the super-long 30-year bond yields rose 1/2 basis point to 1.92 percent and the yield on the short-term 2-year traded nearly flat at 0.83 percent

The German bunds traded flat as investors remained side-lined in any major trading activity amid a muted session that witnessed data of little economic significance ahead of the country’s ZEW economic sentiment index for March, scheduled to be released on March 13 by 10:00GMT. The German 10-year bond yields, which move inversely to its price, hovered around 0.65 percent, the yield on 30-year note flat at 1.30 percent and the yield on short-term 2-year steadied at 0.55 percent.

The New Zealand government bonds plunged at the time of closing as investors’ risk appetite improved, tracking optimism over the U.S. economy, following promising number form the non-farm payroll sector. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 5-1/2 basis points to 3.02 percent, the yield on 20-year also climbed 5-1/2 basis points to 3.52 percent and the yield on short-term 2-year closed 3-1/2 basis points higher at 1.97 percent.

The Japanese government bonds traded nearly flat in subdued session as investors await the Bank of Japan’s (BoJ) January monetary policy meeting minutes scheduled for Tuesday. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded flat at 0.05 percent, the yield on the long-term 30-year note remained steady at 0.76 percent and the yield on short-term 2-year traded 1/2 basis point higher at -0.15 percent.

The Australian 2-year bid yields hit a near 3-week high at the start of the week, following greater optimism among investors for a faster pace of interest rate hike this year. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 2 basis points to 2.82 percent, the yield on the long-term 30-year note also surged 2 basis points to 3.41 percent and the yield on short-term 2-year too traded 2 basis points higher at 2.04 percent.


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