Europe Roundup: Sterling hits fresh six-month low against dollar, European shares snap 4-day losing streak, Oil prices climb $1 as markets focus on supply tightness-September 27th,2023

Posted at 27 September 2023 / Categories Market Roundups

Market Roundup

• German Oct GfK Consumer Climate  -26.5,-26.0 forecast,-25.5 previous

•Sweden Aug Household Lending Growth (YoY) 0.7%, 0.9% previous

•Sweden Aug Trade Balance  -8.40B, 4.60B previous

•France Jobseekers Total 2,827.6K, 2,816.6K previous

•Irish Aug Retail Sales (MoM)  -0.1%, -0.8% previous

•Switzerland Sep ZEW Expectations - 27.6, -38.6 previous

Looking Ahead Economic Data (GMT)

•12:30 US Aug Durable Goods Orders (MoM) -0.5% forecast, -5.2% previous

•12:30 US Aug Durables Excluding Defense (MoM) -5.5% previous

•12:30 US Aug Goods Orders Non Defense Ex Air (MoM)  0.0% forecast, 0.1% previous

•12:30 US Aug Core Durable Goods Orders (MoM)  0.1% forecast, 0.5% previous

 •14:30   US  Cushing Crude Oil Inventories -2.064M previous

•14:30   US  Distillate Fuel Production -0.229M previous

•14:30   US  Gasoline Production 0.499M previous

•14:30   US  Gasoline Inventories -0.120M forecast, -0.831M previous

•14:30   US  Crude Oil Inventories -1.320M forecast, -2.135M previous

Looking Ahead Events And Other Releases(GMT)

•13:00 Swiss  SNB Quarterly Bulletin

Currency Forecast

EUR/USD: The euro declined  on Wednesday  as  dollar rose on the prospect of higher-for-longer U.S. rates. Fed officials have in recent days flagged the possibility that the central bank would need to raise interest rates further, after it kept rates steady last week but stiffened its hawkish monetary policy stance. The U.S. personal consumption expenditures (PCE) index, Fed’s preferred inflation measure, is due on Friday. The Labor Department will release the monthly employment report on Oct. 6 followed by the CPI report on Oct. 12. The euro was last down 0.3% at $1.0534, its lowest level since March 15. The single currency is on track to lose more than 3% in the three months to end-September, its worst quarterly performance in a year. Immediate resistance can be seen at 1.0603(5DMA), an upside break can trigger rise towards 1.0619(38.2%fib).On the downside, immediate support is seen at  1.0540(23.6%fib), a break below could take the pair towards 1.0511(Lower BB).

GBP/USD: Sterling fell to a fresh six-month low against a strengthening dollar on Wednesday as markets are pricing in that the Bank of England (BoE) is done hiking interest rates as the economy deteriorated, while British inflation subsided.Sterling is set for the biggest monthly drop since August 2022, down more than 4% in September, as money markets are pricing in no further BoE rate hikes this year, according to LSEG data. Traders also expect the central bank to start cutting rates next summer.The BoE kept rates on hold last week - the first meeting at which it had done so since December 2021  on the back of signs economic growth is slowing and data showing a surprise cooling in Britain's inflation. Immediate resistance can be seen at 1.2202(5DMA), an upside break can trigger rise towards 1.2247(38.2%fib).On the downside, immediate support is seen at 1.2132 (23.6%fib), a break below could take the pair towards 1.2167(Lower BB). 

 USD/CHF: The U.S. dollar rose against Swiss franc on Wednesday as the greenback firmed on the back of a higher-for-longer interest rate scenario. There is a 40% chance that the U.S. Federal Reserve will need to raise rates “meaningfully” to beat inflation, Minneapolis Fed Bank President Neel Kashkari said on Tuesday. Market focus now turns to the personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, due on Friday. The U.S. dollar index , which measures the greenback against a basket of other major currencies, peaked at a 10-month high of 106.49. Immediate resistance can be seen at 0.9189 (23.6%fib), an upside break can trigger rise towards 0.9202(Higher BB).On the downside, immediate support is seen at 0.9138(5DMA), a break below could take the pair towards 0.9110(38.2%fib).

USD/JPY: The dollar hit fresh 11-month high against the yen on Wednesday  as the prospect of  higher U.S. rates boosted dollar. The yen's slow-but-steady decline to the psychological level of 150 per dollar has put traders on high alert for any signs of intervention from Japanese authorities, as officials ramp up their rhetoric against the sliding currency.The 150 zone is seen by some as a red line that would spur Japanese authorities to intervene, like they did last year.Minutes of the Bank of Japan's July meeting out on Wednesday showed that policymakers agreed on the need to maintain ultra-loose monetary settings but were divided on how soon the central bank could end negative interest rates. Strong resistance can be seen at 149.12(23.6%fib) an upside break can trigger rise towards 149.55 (Higher BB).On the downside, immediate support is seen 148.34(5DMA), a break below could take the pair towards 147.03 (38.2%fib).

Equities Recap

European shares rose on Wednesday after four straight sessions of losses, while insurance stocks capped the gains as Netherlands' largest insurer NN Group fell after an unfavourable court ruling.

At (GMT 12:20 ),UK's benchmark FTSE 100 was last trading down at 0.10 percent, Germany's Dax down up by 0.18 percent, France’s CAC   was down  by 0.06 percent.

Commodities Recap

 Oil prices rose by more than $1 on Wednesday as markets focused on supply tightness heading into winter and a "soft landing" for the U.S. economy.

Brent crude futures broached $95, up $1.14 to $95.10 a barrel by 1112 GMT. U.S. West Texas Intermediate crude futures climbed $1.35 to $91.74.

Gold fell to its lowest in over a month on Wednesday on the dollar’s ascent as markets braced for the prospect of interest rates staying elevated for longer.

Spot gold was down 0.3% at $1,895.13 per ounce by 0932 GMT, its lowest level since Aug. 22. U.S. gold futures eased 0.3% to $1,913.30.

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