News

Europe Roundup: Sterling gains on upbeat UK inflation; Swiss franc, yen surge as investors remain cautious ahead of Fed policy outcome, Powell speech; European shares ease - Wednesday, June 19th, 2019

Posted at 19 June 2019 / Categories Market Roundups


Market Roundup

  • EUR/USD 0.11%, USD/JPY -0.05%, GBP/USD 0.15%, EUR/GBP -0.08%
     
  • DXY -0.07%, DAX -0.06%, FTSE -0.37%, Brent -0.66%, Gold -0.24%
     
  • Fed likely to leave rates steady, despite market outlook and Trump demands
     
  • China says history shows positive outcome from U.S. talks possible
     
  • Iran says it will not give Europe more time to save nuclear deal
     
  • Great Britain May CPI YY, 2.0%, 2.0% f'cast, 2.1% prev
     
  • Great Britain May RPI YY, 3.0%, 2.9% f'cast, 3.0% prev
     
  • Great Britain May Core CPI MM, 0.2%, 0.2% f'cast, 0.3% prev
     
  • Great Britain May Core CPI YY, 1.7%, 1.7% f'cast, 1.8% prev
     
  • UK factory orders slide in June as car output withers - CBI
     
  • Germany May Producer Prices YY, 1.9%, 2.1% f'cast, 2.5% prev
     
  • EU Apr Current Account NSA (EUR), 19.2 bln, 35.1 bln prev
     
  • EU Apr Current Account SA (EUR), 20.900 bln, 24.700 bln prev

Economic Data Ahead

  • (0830 ET/1230 GMT) Statistics Canada is expected to report that the annual inflation rate rose 2.1 percent in May from 2.0 percent in April.
     
  • (0900 ET/1300 GMT) Swiss National Bank releases its Quarterly Bulletin.
     
  • (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending June 14.

Key Events Ahead

  • (0830 ET/1230 GMT) European Central Bank's Benoit Coeure participates in a session in Sintra, Portugal
     
  • (0930 ET/1330 GMT) German Finance Minister Olaf Scholz speaks to students at Berlin's Free University in Berlin
     
  • (1000 ET/1400 GMT) European Central Bank's Mario Draghi delivers closing remarks in Sintra, Portugal
     
  • (1400 ET/1800 GMT) The U.S. Federal Reserve's Federal Open Market Committee announces decision on interest rate, followed by a statement.
     
  • (1430 ET/1830 GMT) Federal Reserve chairperson Jerome Powell will hold a news conference
     

FX Beat

DXY: The dollar index retreated from a 2-week peak as investors began to bet on Fed rate cuts amid growing global trade tensions and some signs of economic weakness. The greenback against a basket of currencies traded 0.1 percent down at 97.55, having touched a high of 97.77 on Tuesday, its highest since June 3. FxWirePro's Hourly Dollar Strength Index stood at -44.64 (Neutral) by 0600 GMT.

EUR/USD: The euro steadied after falling to a 2-week low in the previous session on European Central Bank President Mario Draghi's comments, citing that the central bank would ease policy again if inflation fails to accelerate. The European currency traded 0.1 percent up at 1.1201, having touched a low of 1.1181 on Tuesday, its lowest since June 3. FxWirePro's Hourly Euro Strength Index stood at -101.48 (Highly Bearish) by 1000 GMT. Immediate resistance is located at 1.1258 (32.2% retracement of 1.1347 and 1.1202), a break above targets 1.1292 (61.8% retracement). On the downside, support is seen at 1.1172 (May 24 Low), a break below could drag it below 1.1141 (May 21 Low).

USD/JPY: The dollar declined as investors waited to see if the U.S. Federal Reserve would follow the lead of the European Central Bank and sound as dovish on future interest rate cuts and stimulus. However, it trimmed some early session losses on news that Trump will meet Chinese leader Xi Jinping at the G20 summit this month. The pair was trading 0.05 percent down at 108.38, having hit a high of 108.72 on Monday, its highest since June 11. FxWirePro's Hourly Yen Strength Index stood at 71.62 (Bullish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S.  Federal Reserve's policy decision. Immediate resistance is located at 108.80 (June 11 High), a break above targets 109.08 (Jan. 8 High). On the downside, support is seen at 107.88 (June 3 Low), a break below could take it lower at 107.51 (Jan. 4 Low).

GBP/USD: Sterling surged, extending previous session gains, after data showed Britain's consumer prices rose at an annual rate of 2.0 percent in May, in line with the consensus and following a 2.1 percent increase in April. The major traded 0.2 percent up at 1.2585, having hit a low of 1.2506 on Tuesday; it’s lowest since Jan 3. FxWirePro's Hourly Sterling Strength Index stood at -65.09 (Bearish) 1000 GMT. Immediate resistance is located at 1.2606 (38.2% retracement of 1.2758 and 1.12511), a break above could take it near 1.2635 (50% retracement). On the downside, support is seen at 1.2476 (Dec. 12 Low), a break below targets 1.2435. Against the euro, the pound was trading 0.1 percent up at 89.01 pence, having hit a low of 89.74 on Tuesday, it’s lowest since Jan. 15.

USD/CHF: The Swiss franc retreated from a fresh 2-week low, as investors remained cautious ahead of the U.S. Federal Reserve's monetary policy meeting outcome. The major trades 0.3 percent down at 0.9975, having touched a high of 1.0014 earlier; it’s highest since June 3. FxWirePro's Hourly Swiss Franc Strength Index stood at -50.71 (Bearish) by 1000 GMT. On the higher side, near-term resistance is around 1.0042 (May 24 High) and any break above will take the pair to next level till 1.0098 (May 30 High). The near-term support is around 0.9925 (Jan. 14 Low), and any close below that level will drag it till 0.9879 (June 6 Low).

Equities Recap

European shares retreated from a 5-month peak, while investors awaited the Fed monetary policy statement and a press conference by Chairman Jerome Powell.

The pan-European STOXX 600 index slumped 0.3 percent at 383.80 points, while the FTSEurofirst 300 tumbled 0.1 percent to 1,513.36 points.

Britain's FTSE 100 trades 0.3 percent down at 7,419.86 points, while mid-cap FTSE 250 eased 0.2 to 19,277.19 points.

Germany's DAX declined 0.1 percent at 12,324.45 points; France's CAC 40 trades 0.2 percent lower at 5,501.39 points.

Commodities Recap

Crude oil prices declined as data suggesting a smaller-than-expected fall in U.S. crude inventories offset support from hopes for a U.S.-China trade deal. International benchmark Brent crude was trading 0.7 percent lower at $61.80 per barrel by 1014 GMT, having hit a low of $59.55 last week, its lowest since June 5. U.S. West Texas Intermediate was trading 0.3 percent down at $53.88 a barrel, after falling as low as $50.71 last week, its lowest since the June 5.

Gold prices declined as hopes of a resolution to the U.S.-China trade dispute lifted riskier assets, while investors awaited the U.S. Federal Reserve's monetary policy decision later in the day. Spot gold was 0.3 percent down at $1,342.65 per ounce by 1016 GMT, having touched a high of $1,358.06 on Friday, its highest since April 11. U.S. gold futures also declined 0.3 percent to $1,346.60 an ounce.

Treasuries Recap 

The U.S. Treasuries plunged during the afternoon session, ahead of the Federal Reserve’s monetary policy meeting today at 18:00GMT. The yield on the benchmark 10-year Treasury yield jumped 2-1/2 basis points to 2.084 percent, the super-long 30-year bond yields edged nearly 1 basis point higher to 2.559 percent and the yield on the short-term 2-year surged 3 basis points to 1.893 percent.

The German bunds slumped during European trading session ahead of a speech from European Central Bank (ECB) President Mario Draghi, scheduled to be delivered today by 14:00GMT and the country’s manufacturing PMI for the month of June, due to be released on June 21 by 07:30GMT for further direction in the debt market. The German 10-year bond yields, which move inversely to its price, jumped 3 basis points to -0.292 percent, the yield on 30-year note also surged 3 basis points to 0.301 percent and the yield on short-term 2-year traded 3-1/2 basis points higher at -0.708 percent.

The Australian government bond yields slumped during early Asian session despite a bounce-back in the United States counterpart after President Donald Trump agreed to meet his Chinese peer Xi Jinping at the G-20 Summit, scheduled to start next week. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged nearly 3 basis points to 1.343 percent, the yield on the long-term 30-year bond slumped 2-1/2 basis points to 1.964 percent and the yield on short-term 2-year also traded 2-1/2 basis points lower at 0.989 percent.


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