News

Europe Roundup: Sterling eases ahead of UK Budget release, dollar index steadies amid Fed rate hike speculation, investors eye U.S. CPI – Tuesday, March 13th, 2018

Market Roundup

  • France Q4 non-farm payrolls rev stays flat at 0.3 % vs previous 0.3 %
     
  • Spain Feb HICP yy stays flat at 1.2 % (forecast 1.2 %) vs previous 1.2 %
     
  • Spain Feb CPI yy increase to 1.1 % (forecast 1.1 %) vs previous 0.6 %
     
  • Spain Feb CPI mm increase to 0.1 % (forecast 0.1 %) vs previous -1.1 %
     
  • Spain Feb HICP mm increase to 0.1 % (forecast 0.1 %) vs previous -1.5 %
     
  • UK foreign secretary Johnson says Britain has been encouraged by “willingness of friends” to show support after Russian spy poisoning-Press Association
     
  • EU's Juncker says it is now time to translate speeches into treaties on Brexit
     
  • Italy's league leader Salvini says does not foresee any unilateral, improvised exit from Euro
     
  • German firms struggling to fill 1.6 mln job vacancies – DIHK survey
     
  • German companies face unprecedented labour shortages – DIHK Chambers of Industry and Commerce

Economic Data Ahead

  • (0830 ET/1230 GMT) The U.S. consumer price index likely increased 0.2 percent in February after posting a gain of 0.5 percent in January, while in the 12 months through February, the CPI is expected to have risen 2.2 percent. Excluding food and energy, the core CPI probably rose 0.2 percent, after rising 0.3 percent in the previous month.
     
  • (1630 ET/2030 GMT) API reports its weekly crude oil stock.

Key Events Ahead

  • (1030 ET/1430 GMT) Bank of Canada Governor Stephen Poloz will give a speech on the labor market at Queen's University in Ontario

FX Beat

DXY: The dollar index rose as investors’ awaited U.S. consumer price data later in the day to gauge the outlook for inflation and Federal Reserve policy. The greenback against a basket of currencies 0.1 percent up at 90.05, having touched a high of 90.36 on Friday, its highest since Mar. 1. FxWirePro's Hourly Dollar Strength Index stood at 19.45 (Neutral) by 1000 GMT.

EUR/USD: The euro eased as the greenback rose on speculation that upbeat U.S. consumer price index report could stoke expectations the Federal Reserve will likely raise interest rates four times, rather than three times, this year. The European currency traded 0.1 percent down at 1.2328, having touched a high of 1.2460 on Thursday, its highest since Feb. 16. FxWirePro's Hourly Euro Strength Index stood at -48.89 (Neutral) by 1000 GMT. Immediate resistance is located at 1.2323 (5-DMA), a break above targets 1.2465 (Feb 14 High). On the downside, support is seen at 1.2290 (Previous Session Low), a break below could drag it lower 1.2221.

USD/JPY: The dollar rallied to a near 2-week peak above the 107.00 handle as a modest uptick in the U.S. Treasury bond yields and a mildly positive trading sentiment around equity market weighed on the Japanese Yen's safe-haven appeal. The major was trading 0.7 percent up at 107.17, having hit a high of 107.22 earlier, its highest since Mar. 1. FxWirePro's Hourly Yen Strength Index stood at -168.73 (Highly Bearish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. consumer price index. Immediate resistance is located at 107.52 (Feb 28 High), a break above targets 107.90 (Feb. 21 High). On the downside, support is seen at 106.15, a break below could take it lower 105.89.

GBP/USD: Sterling declined after rising for two consecutive sessions, as investors remained cautious over Brexit progress at a European Union summit later this month. Moreover, investors refrained from taking big positions ahead of the UK Annual Budget Release. The major traded 0.1 percent down at 1.3897, having hit a high of 1.3917 the session before, it’s highest since Mar. 6. FxWirePro's Hourly Sterling Strength Index stood at 19.75 (Neutral) by 1000 GMT. Investors’ focus will remain on the UK Budget report, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3929, a break above could take it near 1.3996. On the downside, support is seen at 1.3843 (10-DMA), a break below targets 1.3788 (Mar. 9 Low). Against the euro, the pound was trading 0.05 percent down at 88.71 pence, having hit a high of 88.49 pence on Monday, it’s highest since Mar 1.

USD/CHF: The Swiss franc consolidated within a narrow range as investors focused on U.S. inflation data due later in the day for clues on the pace of Federal Reserve interest rate rises this year. The major trades flat at 0.9477, having touched a high of 0.9534 on Friday, it’s highest since Jan. 24. FxWirePro's Hourly Swiss Franc Strength Index stood at -88.68 (Slightly 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 0.9436 (10-DMA) and any close below that level will drag it till 0.9381 (21-DMA).

Equities Recap

European shares gained, while the greenback steadied against a basket of currencies as investors awaited the latest inflation figures from the United States.

The pan-European STOXX 600 index advanced 0.1 percent to 379.54 points, while the FTSEurofirst 300 index gained 0.1 percent to 1,484.90 points.

Britain's FTSE 100 trades 0.05 percent higher at 7,216.77 points, while mid-cap FTSE 250 eased 0.3 percent to 20,055.00 points.

Germany's DAX rose 0.2 percent at 12,438.59 points; France's CAC 40 trades 0.5 percent up at 5,301.70 points.

Commodities Recap

Crude oil prices steadied after falling in the previous session on the back of inexorable rise in U.S. crude output. International benchmark Brent crude was trading 0.3 percent up at $65.13 per barrel by 0953 GMT, having hit a low of $63.41 on Thursday, its lowest since Mar. 2. U.S. West Texas Intermediate was trading 0.3 percent up at $61.53 a barrel, after falling as low as $59.99 on Thursday, its weakest since Feb. 15.

Gold prices declined on a firmer dollar as investors waited for U.S. consumer price data due later in the day to gauge the outlook for inflation and the Federal Reserve's rate hike stance. Spot gold eased 0.3 percent at $1,318.45 per ounce as of 0955 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 $1,320.00 an ounce.

Treasuries Recap

The U.S. Treasuries lost ground even as market participants hope to see a slight downward revision in the country’s consumer price inflation for the month of February, scheduled to be released today by 12:30GMT. The yield on the benchmark 10-year Treasuries rose 1 basis point to 2.88 percent, the super-long 30-year bond yields climbed nearly 1-1/2 basis points to 3.14 percent and the yield on the short-term 2-year traded tad higher at 2.27 percent.

The German bunds edged slightly higher as investors wait to see the country’s consumer price inflation index (CPI) for the month of February, scheduled to be released on March 14 by 07:00GMT, besides European Central Bank (ECB) President Mario Draghi who is also due to deliver a keynote speech on the same day by 08:00GMT for further direction in the debt market. The German 10-year bond yields, which move inversely to its price, hovered around 0.62 percent, the yield on 30-year note slipped nearly 1 basis point to 1.27 percent and the yield on short-term 2-year traded 1/2 basis point lower at 0.57 percent.

The New Zealand government bonds close tad higher even as market participants are anticipating a slight rise in the country’s gross domestic product (GDP) for the fourth quarter of last year, scheduled to be released on March 14 by 21:45GMT. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slid 1/2 basis point to 2.99 percent, the yield on 20-year also slipped 1/2 basis point to 3.49 percent and the yield on short-term 2-year too closed 1/2 basis point lower at 1.97 percent.

The Australian bonds remained tad higher during Asian session amid a subdued trading day that witnessed data of little economic significance. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slid 1/2 basis point to 2.81 percent, the yield on the long-term 30-year note hovered around 3.40 percent and the yield on short-term 2-year traded 1 basis point lower at 2.03 percent.


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