News

Europe Roundup: Sterling nears 1-year trough amid mounting no deal Brexit fears, dollar steadies ahead of U.S.-Japan trade talks, European shares trade in red – Thursday, August 8th, 2018

Market Roundup

  • EUR/USD -0.07%, USD/JPY 0.14%, GBP/USD 0.23%, EUR/GBP -0.27%
     
  • DXY 0.13%, DAX 0.09%, FTSE -0.57%, Brent -0.08%, Gold 0.19%
     
  • Russian market selloff deepens on U.S. sanctions move
     
  • Great Britain Jul RICS Housing Survey, 4, 4 forecast, 2 previous, 3 revised
     
  • ECB sees intensifying risk from tariffs, protectionism
     
  • Sterling nears one-year low as Brexit selloff mounts
     
  • Turkish lira hits record low as Turkey-U.S. concerns weigh
     
  • Oil regains some poise after 3 percent drop
     
  • Manafort trial focus shifts to bank fraud as prosecutors near end of case
     
  • U.S. can't be trusted, Iran's Rouhani tells North Korea
     

Economic Data Ahead

  • (0815 ET/1215 GMT) Canadian Mortgage and Housing Corp will report housing starts for the month of July. The indicator is expected to rise at a seasonally adjusted annualized rate of 219,500 after increasing 248,100 in the previous month.
     
  • (0830 ET/1230 GMT) The U.S. producer price index is likely to have increased 0.2 percent in July from 0.3 percent in June, while in the 12 months through the same period, it is expected to have advanced 3.4 percent. PPI excluding food and energy probably edged up 0.2 percent after rising 0.3 percent June.
     
  • (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 2,000 to a seasonally adjusted 220,000 for the week ended Jul. 30, while continuing claims for the week ended Jul. 27 is expected to rise to 1.740 million from a previous reading of 1.724 million.
     
  • (0830 ET/1230 GMT) The Statistics Canada releases its New Housing Price Index (NHPI) for the month of June. The index rose 0.9 percent in May
     
  • (1000 ET/1400 GMT) The U.S. Census Bureau is likely to report that wholesale inventories stayed flat in June, unchanged from the prior month. 
     
  • (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending July 30.
     

Key Events Ahead

  • (0930 ET/1330 GMT) Federal Reserve Bank of Chicago President Charles Evans speech..

FX Beat

DXY: The dollar index edged up, ahead of the country’s initial jobless claims and the producer price index for the month of July for further direction. The greenback against a basket of currencies trades 0.2 percent up at 95.23, having touched a high of 95.52 on Monday, its highest since July 19. FxWirePro's Hourly Dollar Strength Index stood at -8.81 (Neutral) by 1000 GMT.

EUR/USD: The euro slumped, reversing most of its previous session gains, as markets remain worried over geopolitics tensions from the U.S.-China trade war to Brexit. The European currency traded 0.1 percent down at 1.1598, having touched a high of 1.1628 on Wednesday, its highest since August 2. FxWirePro's Hourly Euro Strength Index stood at 74.81 (Slightly Bullish) by 1000 GMT. Immediate resistance is located at 1.1626 (10-DMA), a break above targets 1.1655 (21-DMA). On the downside, support is seen at 1.1540 (August 6 Low), a break below could drag it till 1.1508 (June 21 Low).

USD/JPY: The dollar retreated from a 2-week low hit earlier in the day as investors await the talks in Washington, in which Japan will seek to prevent tariffs on its car exports and fend off U.S. demands for a bilateral free trade agreement. The major was trading 0.2 percent up at 111.12, having hit a low of 110.70 earlier, its lowest since July 26. FxWirePro's Hourly Yen Strength Index stood at 2.0 (Neutral) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. producer price index, unemployment benefit claims, and wholesale inventories. Immediate resistance is located at 111.32 (5-DMA), a break above targets 111.69 (21-DMA). On the downside, support is seen at 110.59 (July 26 Low), a break below could take it lower 110.28 (July 5 Low).

GBP/USD: Sterling steadied near the 1.2900 handle after nearing a 1-year low earlier in the day, as investors grew nervous that Britain will leave the European Union without an agreement on its future relationship with the EU. The major traded 0.05 percent up at 1.2883, having hit a low of 1.2842 earlier; it’s lowest since Aug. 2017. FxWirePro's Hourly Sterling Strength Index stood at -50.62 (Bearish) 1000 GMT. Immediate resistance is located at 1.2955 (5-DMA), a break above could take it near 1.3037 (21-DMA). On the downside, support is seen at 1.2820, a break below targets 1.2800. Against the euro, the pound was trading 0.2 percent up at 89.94 pence, having hit a low of 90.30 earlier, it’s lowest since Oct. 2017.

USD/CHF: The Swiss franc consolidated within narrow ranges after rising to a 6-day high earlier in the day, as growing geopolitical tensions sent investors seeking safe-haven assets. The major trades flat at 0.9934, having touched a high of 0.9984 on Monday, it’s highest since July 20. FxWirePro's Hourly Swiss Franc Strength Index stood at 128.27 (Highly Bullish) by 1000 GMT. On the higher side, near-term resistance is around 1.0010 (July 20 High) and any break above will take the pair to next level till 1.0043 (July 19 High). The near-term support is around 0.9915 (August 2 Low) and any close below that level will drag it till 0.9897 (August 1 Low).

Equities Recap

European shares tumbled, as corporate earnings triggered sharp declines, while sterling fell to a near 1-year low against the dollar as no-deal Brexit tensions mounted.

The pan-European STOXX 600 index declined 0.05 percent at 389.60 points, while the FTSEurofirst 300 index eased 0.2 percent to 1,523.97 points.

Britain's FTSE 100 trades 0.7 percent down at 7,723.84 points, while mid-cap FTSE 250 fell 0.05 percent to 20,761.82 points.

Germany's DAX rose 0.5 percent at 12,691.49 points; France's CAC 40 trades 0.1 percent lower at 5,496.35 points.

Commodities Recap

Crude oil rose, paring some of the previous day's steep price decline after the first round of U.S. sanctions against Iran came into effect. International benchmark Brent crude was trading 0.2 percent up at $72.32 per barrel by 1026 GMT, having hit a low of $71.66 on Wednesday, its lowest since June 18. U.S. West Texas Intermediate was trading 0.2 percent higher at $66.91 a barrel, after falling as low as $66.36 on Wednesday, its lowest since June 22.

Gold prices rallied, extending gains for the third straight session, amid geopolitics tensions from the U.S.-China trade war to Brexit. Spot gold was 0.1 percent up at $1,214.74 an ounce at 1037 GMT, having hit its lowest since July 2017 at $1,204.06 on Friday. U.S. gold futures were up 0.1 percent at $1,222.2 an ounce.

Treasuries Recap

The U.S. Treasuries gained ahead of the country’s initial jobless claims and the producer price index for the month of July, scheduled to be released today by 12:30GMT respectively. The yield on the benchmark 10-year Treasuries slipped nearly 1 basis point to 2.95 percent, the super-long 30-year bond yields also remained tad lower at 3.11 percent and the yield on the short-term 2-year traded flat at 2.67 percent.

The United Kingdom’s gilts remained range-bound during European session as investors wait to watch the country’s gross domestic product (GDP) for the second quarter of this year, which is expected to rise from its previous reading, due to be released on August 10 by 08:30GMT. The yield on the benchmark 10-year gilts, slid nearly 1 basis point to 1.30 percent, the super-long 30-year bond yields hovered around 1.75 percent and the yield on the short-term 2-year traded nearly 2-1/2 basis points higher at 0.75 percent.

The New Zealand bonds closed mixed after the Reserve Bank of New Zealand (RBNZ) remained on hold at its monetary policy meeting, held late yesterday, while delivering a dovish tilt to its statement. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, remained tad higher at 2.70 percent, the yield on the long-term 20-year note slipped 1/2 basis point to 3.03 percent and the yield on short-term 2-year slumped 4 basis points to 1.77 percent.

The Japanese government bonds traded nearly flat as investors remain cautious amid hopes of an improvement in the country’s second-quarter gross domestic product (GDP), scheduled to be released today by 23:50GMT. The yield on the benchmark 10-year JGB note, which moves inversely to its price, traded flat at 0.111 percent, the yield on the long-term 30-year note slipped slightly to 0.858 percent and the yield on short-term 2-year hovered around -0.107 percent.

The Australian government bonds gained across the board after China retaliated with USD16 billion tariffs on U.S. imported goods, injecting more fear in investors about a full-fledged trade war between the U.S. and China. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell nearly 3 basis points to 2.655 percent, the yield on the long-term 30-year Note also dipped 3 basis points to 3.130 percent and the yield on short-term 2-year slumped 2-1/2 basis points to 2.006 percent.


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