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Europe Roundup: Sterling hits multi-week peak on BoE rate hike expectations, euro at 2-1/2 month high on better-than-expected trade balance, European shares rally – Friday, April 13th, 2018

Market Roundup

  • EUR/USD 0.08%, USD/JPY 0.26%, GBP/USD 0.44%, EUR/GBP -0.35%
     
  • DXY -0.05%, DAX 0.642%, FTSE -0.08%, Brent 0.37%, Gold 0.11%
     
  • Trump weighs Syria options, Russia envoy says he 'cannot exclude' war
     
  • Trump says U.S. will only rejoin Pacific trade pact if terms are improved
     
  • Trump now less likely to sit for Mueller interview -sources
     
  • China Mar Trade Bal USD, -4.98 bln, 27.21 bln forecast, 33.74 bln previous
     
  • China Mar Exports YY, -2.7%, +10.0% forecast, +44.5% previous
     
  • China Mar Imports +14.4%, +10.0% forecast, +6.3% previous
     
  • HKMA intervenes as Hong Kong dollar hits weak end of trading band
     
  • Germany Mar CPI Final YY, +1.6%, +1.6% forecast, +1.6% previous
     
  • Germany Mar HICP Final YY, +1.5%, +1.5% forecast, +1.5% previous
     
  • Spain Mar CPI YY, +1.2%, +1.2% forecast, +1.1% previous
     
  • Spain Mar HICP YY, +1.3%, +1.3% forecast, +1.3% previous
     
  • EZ Feb Eurostat Trade NSA EUR, 18.9 bln, 3.3 bln previous
     
  • Japan's economy likely stalled in Q1, but set to pick up again – Poll
     
  • Oil heads for biggest weekly gain since July
     
  • Gold on track for second weekly gain as Syria concerns linger
     

Economic Data Ahead

  • (1000 ET/1400 GMT) The U.S. Labor Department releases Job Openings and Labor Turnover Survey (JOLTS) report for the month of February. The report is expected to show job openings eased to 6.17 million from 6.31 million in January.
     
  • (1000 ET/1400 GMT) The University of Michigan is likely to report that U.S. preliminary consumer sentiment index declined to 100.5 in April, after posting a final reading of 101.4 in March.
     
  • (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count. 
     

Key Events Ahead

  • (0800 ET/1200 GMT) Federal Reserve Bank of Boston President Eric Rosengren speaks before the Greater Boston Chamber Economic Outlook Breakfast-Boston
     
  • (0900 ET/1300 GMT) Federal Reserve Bank of St. Louis President James Bullard makes a presentation on “Living Standards across U.S. Metropolitan Statistical Areas” at Washington University-St. Louis
     
  • (1300 ET/1700 GMT) Federal Reserve Bank of Dallas President Robert Kaplan participates in moderated Q&A session before an Odessa Chamber of Commerce Member Luncheon-Odessa, Texas
     

FX Beat

DXY: The dollar index extended gains for the second straight session as caution over a Western military intervention in Syria abated, while investors awaited Federal Open Market Committee’s (FOMC) member Rosengren, Bullard and Kaplan's speech for further direction. The greenback against a basket of currencies trades flat at 89.81, having touched a low of 89.36 on Wednesday, its highest since Mar. 28. FxWirePro's Hourly Dollar Strength Index stood at -15.14 (Neutral) by 1000 GMT.

EUR/USD: The euro rose, reversing some of its previous session losses, as German and Spanish inflation figures for the month of March matched their preliminary readings. Moreover, the major was also boosted by better-than-expected Eurozone Trade Balance, which rose to 21.0 billion euro in February from 19.9 billion euro, beating expectations of 20.2 billion euro. The European currency traded 0.1 percent up at 1.2336, having touched a high of 1.2395 on Tuesday, its highest since Mar. 28. FxWirePro's Hourly Euro Strength Index stood at -31.60 (Neutral) by 1000 GMT. Immediate resistance is located at 1.2345 (Apr. 2 High), a break above targets 1.2421 (Mar. 28 High). On the downside, support is seen at 1.2306 (10-DMA), a break below could drag it lower 1.2260 (Apr. 6 Low).

USD/JPY: The dollar rallied to a 2-1/2 month peak against the Japanese yen, as investors seemed to shrug off the uncertainty over tension in the Middle East and the prospect of a global trade war. The U.S. President Trump made comments indicating he would want to avoid a U.S-China trade war and rejoin the Trans-Pacific Partnership trade pact. The major was trading 0.3 percent up at 107.64, having hit a high of 107.67 earlier, its highest since Feb. 27. FxWirePro's Hourly Yen Strength Index stood at -90.10 (Slightly Bearish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the Fed Rosengren, Bullard and Kaplan's speech. Immediate resistance is located at 107.90 (Feb. 21 High), a break above targets 108.54. On the downside, support is seen at 106.98 (5-DMA), a break below could take it lower 106.32 (21-DMA).

GBP/USD: Sterling surged to a fresh 10-week high against the dollar and a 9-month peak against the euro on the back of firm expectations of a Bank of England interest rate hike next month, while the euro suffered on cautious minutes from the European Central Bank. Additionally, Trump's positive stance on Syria crisis and trade seems to have boosted the bid tone around the risk assets. The British pound traded 0.3 percent up at 1.4266, having hit a high of 1.4296 earlier, it’s highest since Jan 25. FxWirePro's Hourly Sterling Strength Index stood at 65.60 (Bullish) by 1000 GMT. Immediate resistance is located at 1.4345 (Jan. 22 High), a break above could take it near 1.4390. On the downside, support is seen at 1.4158 (5-DMA), a break below targets 1.4099 (10-DMA). Against the euro, the pound was trading 0.3 percent up at 86.35 pence, having hit a high of 86.27 pence earlier, it’s highest since May 2017.

USD/CHF: The Swiss franc eased, extending losses for the fourth straight session as investor risk sentiment revived after Trump tweeted he never said when an attack on Syria would take place. The major trades 0.05 percent up at 0.9625, having touched a low of 0.9534 on Tuesday, it’s lowest since Apr. 3. FxWirePro's Hourly Swiss Franc Strength Index stood at -94.06 (Slightly 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 0.9583 (10-DMA) and any close below that level will drag it till 0.9500.

Equities Recap

European shares advanced to 1-month highs and were on track for its third straight week of gains, while the greenback against a basket of currencies steadied as tensions in the Middle East showed signs of easing.

The pan-European STOXX 600 index rallied 0.4 percent to 380.17 points, while the FTSEurofirst 300 index advanced 0.3 percent to 1,489.45 points.

Britain's FTSE 100 trades 0.1 percent down at 7,252.65 points, while mid-cap FTSE 250 gained 0.5 percent to 19,869.27 points.

Germany's DAX rose 0.7 percent at 12,502.12 points; France's CAC 40 trades 0.4 percent higher at 5,329.19 points.

Commodities Recap

Crude oil prices rose and were heading for their largest weekly gain since July after U.S. President Trump's comments about possible military action in Syria. International benchmark Brent crude was trading 0.3 percent up at $72.35 per barrel by 1028 GMT, having hit a high of $73.05 on Wednesday, its highest since Nov. 2014. U.S. West Texas Intermediate was trading 0.4 percent up at $67.38 a barrel, after rising as high as $67.42 on Wednesday, its highest since Nov. 2014.

Gold prices rallied and were headed for their second weekly gain as investors sought safety amid security tensions over Syria. Spot gold was trading 0.5 percent up at $1,341.14 an ounce as of 1031 GMT, having hit a high of $1,365.01 an ounce on Wednesday, its highest since Jan. 25 and was set for a weekly gain of around half a percent. U.S. gold futures were steady at $1,343.70 an ounce.

Treasuries Recap

The U.S. Treasuries climbed as investors wait to watch the country’s JOLTs job openings data for the month of February, scheduled to be released today 14:00GMT. The yield on the benchmark 10-year Treasuries slipped 1 basis point to 2.82 percent, the super-long 30-year bond yields slumped 1-1/2 basis points to 3.02 percent and the yield on the short-term 2-year traded tad lower at 2.34 percent.

The German bunds slid after the country’s consumer price inflation for the month of March met market expectations, while the Eurozone trade balance for February failed to cheer market participants. The German 10-year bond yields, which move inversely to its price, rose nearly 1 basis point to 0.52 percent, the yield on 30-year note jumped nearly 1-1/2 basis points to 1.19 percent and the yield on short-term 2-year hovered around -0.57 percent.

The Japanese government bonds edged slightly lower as investors booked profits on the last trading day of the week, besides, shrugging-off the dovish comments from the Bank of Japan’s Governor Haruhiko Kuroda. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose nearly 1 basis point to 0.03 percent, the yield on the long-term 30-year note hovered around 0.70 percent and the yield on short-term 2-year remained tad lower at -0.15 percent.

The Australian bonds slumped on the last trading day of the week after the Reserve Bank of Australia (RBA) in its April Financial Stability Report cited that the risks from household debt have subsided. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 4-1/2 basis points to 2.721 percent (hits 1-week high), the yield on the long-term 30-year Note climbed 4 basis points to 3.311 percent and the yield on short-term 2-year also surged 3 basis points to 2.071 percent.


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