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Europe Roundup: Sterling at 2-month low amid persisting Brexit deal concerns, euro declines as German business morale deteriorates, European shares surge - Wednesday, April 24th, 2019

Posted at 24 April 2019 / Categories Market Roundups


Market Roundup

  • EUR/USD -0.15%, USD/JPY -0.01%, GBP/USD 0.05%, EUR/GBP -0.21%
     
  • DXY 0.02%, DAX 0.78%, FTSE -0.25%, Brent -0.05%, Gold -0.01%
     
  • Germany Apr Ifo Business Climate New, 99.2, 99.9 f'cast, 99.6 prev, 99.7 rvsd
     
  • Germany Apr Ifo Current Conditions New, 103.3, 103.6 f'cast, 103.8 prev, 103.9 rvsd
     
  • Germany Apr Ifo Expectations New, 95.2, 96.1 f'cast, 95.6 prev
  • France Apr Business Climate Mfg, 101, 102 f'cast, 102 prev, 103 rvsd
     
  • Top U.S. officials to hold trade talks in China next week
     
  • Brexit clouding UK outlook, limiting investment - UK's Hammond
     
  • Britain starts search for "highest calibre" Bank of England governor
     
  • BoE to shorten stress-testing period to give banks time to reflect
     
  • Sterling at 2-month lows as dollar and Brexit weigh
     
  • Italian cabinet infighting overshadows growth plan
     
  • Italy's Salvini dismisses talk of government collapse, snap poll
     
  • North Korea's Kim arrives for summit with Russia's Putin
     

Economic Data Ahead

  • (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending April 19.

Key Events Ahead

  • (0915 ET/1315 GMT) British Finance Minister Philip Hammond speaks to lawmakers on parliament's Treasury Committee about the Spring Statement budget update he announced in March in London
     
  • (1000 ET/1400 GMT) Bank of Canada will meet to announce its benchmark interest rate, where it is expected to hold interest rates at 1.75 percent.
     
  • (1115 ET/1415 GMT) Bank of Canada Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins will hold a press conference to discuss the content of the Monetary Policy Report in Ottawa
     

FX Beat

DXY: The dollar index rallied towards a 22-month peak as strong U.S. housing data indicated the economy strengthened despite ongoing trade tensions. The greenback against a basket of currencies traded 0.1 percent up at 97.70, having touched a high of 97.78 on Tuesday, its highest since June. 2017. FxWirePro's Hourly Dollar Strength Index stood at 103.90 (Highly Bullish) by 1000 GMT.

EUR/USD: The euro plunged, drifting closer to a 3-week low touched in the previous session after data showed German business morale deteriorated in April due to trade tensions. The European currency traded 0.2 percent down at 1.1208, having touched a low of 1.1192 on Tuesday, its lowest since Apr. 2. FxWirePro's Hourly Euro Strength Index stood at 5.19 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1287 (Apr. 10 High), a break above targets 1.1331 (Mar. 25 High). On the downside, support is seen at 1.1176 (Mar. 7 Low) a break below could drag it till 1.1154.

USD/JPY: The dollar consolidated within narrow ranges, as investors remained on the sidelines following news that U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will travel to Beijing for trade talks beginning on April 30. The major was trading flat at 111.85, having hit a low of 111.65 on Tuesday, its lowest since Apr. 12. FxWirePro's Hourly Yen Strength Index stood at 90.21 (Slightly Bullish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, amid a lack of significant economic data from the U.S. docket. Immediate resistance is located at 112.60 (Dec. 20 High), a break above targets 113.24 (Dec. 5 High). On the downside, support is seen at 111.20 (Apr. 3 Low), a break below could take it lower at 110.53 (Mar. 20 Low).

GBP/USD: Sterling consolidated above a 2-month low after British finance minister Philip Hammond stated that Brexit was creating very significant uncertainty about the economic outlook. Moreover, fading hopes for a breakthrough in Brexit talks between the ruling Conservative party and the opposition Labour party continued to weigh on the British pound. The major traded 0.1 percent up at 1.2936, having hit a low of 1.2914 earlier; it’s lowest since Feb. 19. FxWirePro's Hourly Sterling Strength Index stood at 26.93 (Neutral) 1000 GMT. Immediate resistance is located at 1.2984 (5-DMA), a break above could take it near 1.3026 (10-DMA). On the downside, support is seen at 1.2891 (Feb. 18 Low), a break below targets 1.2832 (Feb. 12 Low). Against the euro, the pound was trading 0.1 percent up at 86.64 pence, having hit a low of 86.81 on Tuesday, it’s lowest since Mar. 22.

USD/CHF: The Swiss franc rebounded from an over 2-year low touched in the prior session, as China stimulus worries trigged risk-off sentiment across currency markets. The major trades 0.1 percent down at 1.0186, having touched a high of 1.0230; it’s highest since Jan. 11 2017. FxWirePro's Hourly Swiss Franc Strength Index stood at -15.53 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 1.0248 (Jan. 11 2017 High) and any break above will take the pair to next level till 1.0280 (Dec. 29, 2016, High). The near-term support is around 1.0150 (5-DMA), and any close below that level will drag it till 1.0095 (10-DMA)

Equities Recap

European shares rallied, boosted by strong corporate earnings reports, while sterling eased on dollar strength and Brexit concerns.

The pan-European STOXX 600 index surged 0.2 percent at 392.19 points, while the FTSEurofirst 300 index gained 0.2 percent to 1,540.67 points.

Britain's FTSE 100 trades 0.3 percent down at 7,504.03 points, while mid-cap FTSE 250 gained 0.1 to 19,929.81 points.

Germany's DAX rose 0.9 percent at 12,347.57 points; France's CAC 40 trades 0.1 percent higher at 5,595.02 points.

Commodities Recap

Crude oil prices surged, hovering towards their highest since early November on concerns that OPEC output cuts and sanctions would take too much oil out of the market. International benchmark Brent crude was trading 0.1 percent higher at $74.46 per barrel by 1034 GMT, having hit a high of $74.71 on Tuesday, its highest since Nov. 1, 2018. U.S. West Texas Intermediate was trading 0.2 percent down at $66.03 a barrel, after rising as high as $66.58 on Tuesday, its highest since the Oct. 31, 2018.

Gold prices declined, drifting closer to a 4-month low touched in the previous session, as the greenback gained after strong U.S. housing data dampened concerns about an economic slowdown in the country. Spot gold was 0.05 percent down at $1,272.01 per ounce by 1037 GMT, having touched a low of $1,266.18 on Tuesday, its lowest since Dec. 27. U.S. gold futures were 0.1-percent lower at $1,272.40 an ounce.

Treasuries Recap

The U.S. Treasuries jumped during the afternoon session ahead of today’s 5-year auction, scheduled to be held at 17:00GMT. The yield on the benchmark 10-year Treasury yield plunged 3 basis points to 2.540 percent, the super-long 30-year bond yields suffered nearly 2 basis points to 2.963 percent and the yield on the short-term 2-year plunged 3-1/2 basis points to 2.330 percent.

 The German bunds gained during European trading session after the country’s Ifo business climate index for the month of April missed market expectations, also coming in lower than the previous reading in March. The German 10-year bond yields, which move inversely to its price, fell 2 basis points to 0.021 percent, the yield on 30-year note slumped 2-1/2 basis points to 0.669 percent while the yield on short-term 2-year traded nearly flat at -0.587 percent.

The Japanese government bonds jumped at the time of closing tracking a similar movement in the United States Treasuries amid a regular bond-buying operation conducted by the Bank of Japan (BoJ) earlier today. The yield on the benchmark 10-year JGB note, which moves inversely to its price, hovered around -0.029 percent, the yield on the long-term 30-year slipped 1/2 basis point to 0.575 percent and the yield on short-term 2-year remained flat at -0.149 percent.

The Australian 10-year government bond yield plunged to 3-week low during Asian trading session following disappointment in the country’s consumer price inflation (CPI) data for the first quarter of this year, which further raised the chances of an interest rate cut by the Reserve Bank of Australia (RBA) over the coming months. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 10 basis points to 1.799 percent (lowest since April 1), the yield on the long-term 30-year bond slumped nearly 8 basis points to 2.441 percent and the yield on short-term 2-year traded 15 basis points lower at 1.330 percent.


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