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Europe Roundup: Sterling stuck near 8-week lows on talk of negative rates, Brexit, European shares gain, Gold jumps by 1%,Oil rises as lockdowns ease-May 18th,2020

Posted at 18 May 2020 / Categories Market Roundups


Market Roundup

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Looking Ahead - Events, Other Releases (GMT)    

• 13:00 French 3-Month BTF Auction -0.549% previous

•13:00 French 6-Month BTF Auction -0.505% previous

• 13:00 French 12-Month BTF Auction -0.496% previous

• 14:00 US May NAHB Housing Market Index 33 forecast, 30 previous

• 15:30 US May 3-Month Bill Auction 0.125% previous

• 15:30 US May 6-Month Bill Auction 0.155% previous

Looking Ahead - Events, Other Releases (GMT)

• No events ahead

Fxbeat

EUR/USD: The euro traded little changed against dollar on Monday as rising Sino-U.S. trade fiction cast a cloud over investor sentiment. Investors stayed away from big bets and waited for further details on trade talks between the world's two top economies, after U.S. President Donald Trump on Friday said he was not thrilled with the Phase-1 deal reached in January. Furthermore, U.S. Federal Reserve Chairman Jerome Powell sounded a note of caution on Sunday, saying a U.S. economic recovery may stretch deep into next year and a full comeback may hinge on finding a coronavirus vaccine. Immediate resistance can be seen at 1.0827 (38.2% fib), an upside break can trigger rise towards 1.0887 (50% fib).On the downside, immediate support is seen at 1.0788 (15th May low), a break below could take the pair towards 1.0700 (Psychological level).

GBP/USD: Sterling hovered at near two-month lows against the  dollar on Monday, as a stalemate in Brexit negotiations and talk of negative interest rates from the Bank of England kept the currency pinned within tight ranges. Britain and the EU’s chief negotiators on Friday gave downbeat assessments of the latest round of Brexit negotiations, while the Bank of England’s chief economist refused to rule out the possibility of taking interest rates below zero to prop up the country’s economy. Immediate resistance can be seen at 1.2187 (5 DMA), an upside break can trigger rise towards 1.2268 (9 DMA).On the downside, immediate support is seen at 1.2070 (23.6%fib), a break below could take the pair towards 1.2000(Psychological level).

USD/CHF: The dollar strengthened against the Swiss franc on Monday as optimism about a reopening of economies increased demand for risk appetite. The gradual easing of lockdowns has raised hope across global markets despite signs of fresh trade tensions between the United States and China, though traders were wary of taking big bets before more data this week. Immediate resistance can be seen at 0.9750 (23.6% fib), an upside break can trigger rise towards 0.9800 (Psychological level).On the downside, immediate support is seen at 0.9720 (38.2% fib), a break below could take the pair towards 0.9696 (50%fib).

USD/JPY: The dollar strengthened against the Japanese yen on Monday after data showed Japan slipped into recession for the first time since 2015. Japan’s economy contracted at an annualised rate of 3.4% in January-March, government data showed on Monday, marking the second straight quarter of contraction and meeting the technical definition of recession, due to the coronavirus pandemic. Strong resistance can be seen at 107.35 (30 DMA), an upside break can trigger rise towards 107.55 (55 DMA).On the downside, immediate support is seen at 107.14 (5 DMA), a break below could take the pair towards 106.92 (9 DMA).

Equities Recap

European shares bounced on Monday after their worst week in two months, as investors hoped for a gradual economic recovery with many countries easing coronavirus-led lockdowns.

At (GMT 12:05),UK's benchmark FTSE 100 was last trading up at 2.81 percent, Germany's Dax was up by 3.51 percent, France’s CAC finished was up by 3.07 percent.

Commodities Recap

Gold jumped more than 1% on Monday to its highest since October 2012 after a batch of weak data knocked hopes for a speedy global economic recovery while auto-catalyst palladium surged to a three-week high.

 Spot gold was up 1.3% at $1,763.93 an ounce by 1128 GMT. U.S. gold futures   rose 1% to $1,772.90.

Oil prices climbed by $2 a barrel on Monday, with benchmark Brent hitting a one-month high and U.S. crude topping $30 supported by optimism about the re-opening of economies and output cuts by major producers.

Brent crude was up $1.99, or 6.1%, at $34.49 a barrel by 1041 GMT, its highest level since mid-April.

U.S. West Texas Intermediate (WTI) crude was up $2.46 or 8.4% at $31.89 per barrel, its highest since mid-March.

Treasuries Recap

Government bond yields edged higher across the euro area on Monday as investors got ready for another week of hefty supply, while French bonds saw some underperformance after its ratings outlook was lowered by Fitch Ratings.

France’s 10-year bond yield rose to 0.005%, its highest level in almost a week, pushing the gap over higher-rated German Bund yields to around 51.5 basis points   its widest in over a week.
 


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