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Europe Roundup: Sterling gains on BoE rate hike speculation, euro off 2-week peak on weaker-than-expected industrial production, European shares rally – Thursday, April 12th, 2018

Market Roundup

  • EUR/USD -0.31%, USD/JPY 0.32%, GBP/USD -0.01%, EUR/GBP -0.29%
     
  • DXY 0.26%, DAX 0.53%, FTSE 0.09%, Brent -0.37%, Gold -0.6%
     
  • West weighs Syria attack that could lead to confrontation with Russia
     
  • Global trade growth strong but at risk if spats escalate, WTO says
     
  • Eurozone industrial output weaker than expected in Feb
     
  • China says it will fight back if U.S. escalates trade spat
     
  • Germany's upswing faces headwinds from trade disputes – Economy Ministry
     
  • UK parliament could block Brexit divorce bill – Brexit minister
     
  • Keep Bank of England panels apart or risk errors – Broadbent
     
  • UK lenders expect rebound in demand for mortgage lending in coming months – BoE
     
  • BOJ upbeat on regional Japan but wary over labour shortage, trade risk
     
  • Japan gov't eyes new budget-balancing goal around mid-2020s – sources

Economic Data Ahead

  • (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 12,000 to a seasonally adjusted 230,000 for the week ended Apr. 6, while continuing claims for the week ended Mar. 30 is expected to rise to 1.848 million from the previous reading of 1.808 million.
     
  • (0830 ET/1230 GMT) The U.S. Labor Department publishes import and export prices index for the month of March. The import prices are likely to have gained 0.2 percent after rising 0.4 percent in February, while exports are expected to have edged up 0.2 percent, having posted similar gains in the prior month.
     
  • (0830 ET/1230 GMT) The Statistics Canada releases its New Housing Price Index (NHPI) for the month of February. The index remained unchanged in January.
     
  • (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending April 6

Key Events Ahead

  • (0815 ET/1215 GMT) ECB Executive Board member Benoit Coeure participates in a panel discussion at a conference 'La France et l’Europe dans la mondialisation'-Paris
     
  • (0815 ET/1215 GMT) Vice President of the Bundesbank Prof. Dr. Claudia Maria Buch participates in a Bundesbank Panel discussion at CEPII 40th Anniversary-Paris
     
  • (1100 ET/1500 GMT) Bundesbank speech by Executive Board of the Deutsche Bundesbank Dr. Andreas Dombret on “Where is the Banking Union heading?”-Munich
     
  • (1130 ET/1530 GMT) Deputy Governor of Norges Bank Jon Nicolaisen speaks at the Norwegian Academy Of Science And Letters-Oslo
     
  • (1215 ET/1615 GMT) Jens Weidmann, Germany's respresentative on the ECB Governing Council, lectures about the euro zone's currency union-Berlin
     
  • (1255 ET/1655 GMT) ECB Vice President Vitor Constancio participates in the evening event hosted by the Systemic Risk Council, CFA Institute and CFA Society Belgium-Brussels
     
  • (1500 ET/1900 GMT) Bank of England Governor Mark Carney gives a speech
     
  • (1700 ET/2100 GMT) Federal Reserve Bank of Minneapolis President Neel Kashkari participates in a Q&A moderated by the Associated General Contractors of Minnesota-Minneapolis, Minnesota
     

FX Beat

DXY: The dollar index rebounded from a 2-week low on the back of hawkish FOMC minutes and easing threats of an immediate US attack on Syria. The greenback against a basket of currencies trades 0.2 percent up at 89.73, having touched a low of 89.36 on Wednesday, its highest since Mar. 28. FxWirePro's Hourly Dollar Strength Index stood at -63.35 (Bearish) by 1000 GMT.

EUR/USD: The euro slumped after rising to a 2-week peak in the prior session as Eurozone industrial production was much weaker than expected in February, indicating slower economic growth in the first quarter. The economy's industrial production fell 0.8 percent month-on-month for a 2.9 percent year-on-year rise. The European currency traded 0.3 percent down at 1.2335, having touched a high of 1.2395 on Tuesday, its highest since Mar. 28. FxWirePro's Hourly Euro Strength Index stood at -5.05 (Neutral) by 1000 GMT. Immediate resistance is located at 1.2421 (Mar. 28 High), a break above targets 1.2476 (Mar. 27 High). On the downside, support is seen at 1.2320 (21-DMA), a break below could drag it lower 1.2260 (Apr. 6 Low).

USD/JPY: The dollar rose above the 107.00 handle as hawkish minutes from the U.S. Federal Reserve in the previous session revived expectations of a faster pace of U.S. rate hikes. However, escalating Middle East tensions over Syria limited the upside in the pair. The major was trading 0.3 percent up at 107.13, having hit a high of 107.49 last week, its highest since Mar. 28. FxWirePro's Hourly Yen Strength Index stood at -80.07 (Slightly Bearish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. unemployment benefit claims, import/export price index and FOMC member Kashkari speech. Immediate resistance is located at 107.46 (Apr. 6 High), a break above targets 107.90 (Feb. 21 High). On the downside, support is seen at 106.27 (21-DMA), a break below could take it lower 105.99 (Apr. 4 Low).

GBP/USD: Sterling rallied, extending gains for the fifth straight session, bolstered by expectations that the Bank of England would raise rates next month as it tries to curb inflation. Investors now await a flurry of crucial data next week that could help boost up the likelihood of a May interest rate hike. The major traded 0.05 percent up at 1.4180, having hit a high of 1.4223 the day before, it’s highest since Mar. 27. FxWirePro's Hourly Sterling Strength Index stood at 71.94 (Bullish) by 1000 GMT. Immediate resistance is located at 1.4200 (Mar. 28 High), a break above could take it near 1.4244 (Mar. 27 High). On the downside, support is seen at 1.4113 (5-DMA), a break below targets 1.4070 (21-DMA). Against the euro, the pound was trading 0.3 percent up at 86.96 pence, having hit a high of 86.92 pence on Tuesday, it’s highest since Mar 22.

USD/CHF: The Swiss franc slumped to a 6-day low as market's focus shifted away from a lingering trade standoff between Washington and Beijing. The major trades 0.6 percent up at 0.9627, having touched a low of 0.9534 on Tuesday, it’s lowest since Apr. 3. FxWirePro's Hourly Swiss Franc Strength Index stood at -152.96 (Highly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 0.9684 (Jan 15 High) and any break above will take the pair to next level till 0.9748 (Dec 29 High). The near-term support is around 0.9536 (21-DMA) and any close below that level will drag it till 0.9500.

Equities Recap

European shares surged, boosted by merger and acquisition developments, while the greenback rebounded on the back of hawkish assessment of the latest FOMC meeting minutes.

The pan-European STOXX 600 index rallied 0.2 percent to 377.01 points, while the FTSEurofirst 300 index advanced 0.3 percent to 1,480.58 points.

Britain's FTSE 100 trades 0.1 percent up at 7,263.23 points, while mid-cap FTSE 250 gained 0.1 percent to 19,671.99 points.

Germany's DAX rose 0.4 percent at 12,338.74 points; France's CAC 40 trades 0.2 percent higher at 5,290.48 points.

Commodities Recap

Crude oil prices declined, hovering away from highs last reached in late 2014 as ample supplies weighed on investor sentiment. International benchmark Brent crude was trading 0.2 percent down at $71.75 per barrel by 1034 GMT, having hit a high of $73.05 on Wednesday, its highest since Nov. 2014. U.S. West Texas Intermediate was trading 0.1 percent down at $66.64 a barrel, after rising as high as $67.42 on Wednesday, its highest since Nov. 2014.

Gold prices edged down after hitting an 11-week high in the previous session on concerns about possible U.S. military action against Syria. Spot gold was down 0.5 percent at $1,345.79 an ounce as of 1037 GMT, having hit a high of $1,365.01 an ounce on Wednesday, its highest since Jan. 25. U.S. gold futures fell 0.4 percent to $1,354.10 an ounce.

Treasuries Recap

The U.S. Treasuries traded nearly flat as investors wait to watch the country’s initial jobless claims data, scheduled to be released today 12:30GMT respectively. The yield on the benchmark 10-year Treasuries slipped 1/2 basis point to 2.78 percent, the super-long 30-year bond yields remained hovered around 3.00 percent and the yield on the short-term 2-year traded tad higher at 2.31 percent.

The UK gilts remained narrowly mixed as investors wait to watch the Bank of England (BoE) Governor Mark Carney’s speech, scheduled to be held today by 19:00GMT for detailed insights into the debt market. The yield on the benchmark 10-year gilts remained tad higher at 1.39 percent, the super-long 30-year bond yields traded flat at 1.76 percent while the yield on the short-term 2-year traded 1-1/2 basis points lower at 0.87 percent.

The Japanese government bonds remained flat as investors traded sideways, following balanced comments from the Bank of Japan’s Governor Haruhiko Kuroda on the country’s economic growth as well as inflation. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.03 percent, the yield on the long-term 30-year note slipped 1 basis point to 0.71 percent and the yield on short-term 2-year remained flat at -0.15 percent.

The Australian short-term government bonds edged slightly lower as markets trade in a range-bound, as investors are still nervous about global trade tensions. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, traded flat at 2.685 percent, the yield on the long-term 30-year Note dipped nearly 1 basis point to 3.266 percent and the yield on short-term 2-year also rose nearly 1 basis point to 2.050 percent.


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