Europe Roundup: Sterling hits fresh 3-month high at $1.4321 against U.S. dollar, European markets slightly down, gold remains well supported below $1,350 mark - Monday, April 16, 2018

Market Roundup

  • Russia's Putin predicts global 'chaos' if West hits Syria again.
  • China Q1 GDP growth seen easing only slightly as trade tensions mount.
  • Japan, China agree trade war will harm global economy.

  • Reflationist BOJ deputy happy with current pace of easing.
  • UK's May seeks Commonwealth trade boost as final Brexit talks begin.
  • Merkel's conservatives seek to limit her room on euro zone reform.
  • EZ Mar Wholesale Price Index YY, 1.2%, 1.2% previous.
  • EZ Mar Wholesale Price Index MM, 0.0%, -0.3% previous.
  • Oil prices drop as fears about Syria strikes fallout wane.
  • Gold steadies as Syria strike fears fade.
  • Sri Lanka Central Bank - Aware of the growing interest in virtual currencies (vcs), both domestically and internationally.
  • ECB to lend 1.5 bln euros at weekly tender (1.7 bln maturing) – poll.
  • Kazakhstan Central Bank says cuts policy rate to 9.25 pct from 9.50 pct.
  • Kazakhstan Central Bank says will continue gradual rate cuts this year.
  • Egypt's unemployment rate for 2017 drops to 11.8 pct from 12.5 pct in 2016.
  • Greek January - March central government primary budget surplus at 2,320 mln euros vs target of 1,096 mln euros.
  • Zimbabwe March inflation at 2.68 percent y/y vs 2.98 percent in February.
  • Economic Data Ahead

    • (0800 ET/1200 GMT) Poland net inflation YY.
    • (0830 ET/1230 GMT) U.S. NY Fed manufacturing Data.
    • (0830 ET/1230 GMT) U.S. retail sales, core retail sales.
    • (1000 ET/1400 GMT) U.S. business inventories m/m.
    • (1000 ET/1400 GMT) U.S. NAHB housing market index.

    Key Events Ahead

    • (1030 ET/1430 GMT) UK PM May to address parliament on Syria strike.
    • (1045 ET/1445 GMT) FedTrade Operation 30-year Fannie Mae / Freddie Mac (max $680 mn).
    • (1200 ET/1600 GMT) Dallas Fed's Robert Kaplan participates in a Q&A session at at event – Florida.
    • (1200 ET/1600 GMT) Minneapolis Fed's Neel Kashkari speaks at "Too Big To Fail" symposium- Wasgington.
    • (1230 ET/1630 GMT) German Finance Minister Olaf Scholz speaks at Association of German Banks – Berlin.
    • (1315 ET/1715 GMT) FRB Atlanta's Raphael Bostic speaks at chamber of commerce event – Florence.

    FX Recap

    USD: The dollar index, which measures the greenback against a basket of six other major currencies, was little changed at 89.58. It has weakened 0.3 percent so far this month, taking its year-to-date losses to 2.5 percent extending a theme firmly in place since last year.

    EUR/USD: The euro was trading marginally higher at $1.2363 in European hours. Intraday bias remains slightly bullish till the time pair holds key support at 1.2299 mark. A consistent close below $1.2325 will drag the parity down towards key supports around $1.2193 and $1.1936 levels respectively. Alternatively, reversal from key support will take the parity higher towards key resistances around $1.2396, $1.2482 and $1.2555 marks respectively.

    USD/JPY: The yen rises against U.S. dollar and currently trading around 107.20 marks. It made intraday high at 107.60 and low at 107.13 levels. A sustained close above 107.37 is required to take the parity higher towards key resistances around 107.90, 108.70, 110.48 and 112.96 marks. Alternatively, a daily close below 106.75 will drag the parity down towards key supports around 105.32, 104.90, 103.20 and 101.45 marks respectively.

    GBP/USD: The sterling rises 0.5 percent to day's high of $1.4313; hits highest level since Jan 25. The pound rose on Monday despite Britain's military intervention in Syria, as investors focused on data that could help shore up expectations of a May interest rate hike. The pair was currently trading around $1.4305 marks. On the top side key resistance was seen at $1.4345 and support was seen at $1.4002 mark.

    USD/CHF: The Swiss franc trades in narrow range against U.S. dollar and currently hovers around 0.9600 marks. The pair’s upside is limited to 0.9650 as geo political tension increases demand for safe haven assets like swiss franc and yen. The near term resistance is seen around 0.9660 and any convincing break above will take the pair to next level till 0.9700/0.9725/0.9745. On the lower side near term support is around 0.9580 and any break below that level targets 0.9520/0.9480/0.9420.

    Equities Recap

    Eurostoxx 50 futures up 0.27 pct.

    Europe's stoxx 600 opens down 0.01 pct.

    Germany's DAX was trading 0.11 pct up at 12,457.47 points, Spain's IBEX up 0.04 pct.

    France’s CAC 40 futures up 0.20 pct at 5,315.55 points .

    FTSE future was trading 0.41 pct lower at 7,233.72 points.

    U.S. stock futures up; Dow and S&P futures up 0.6 pct each, Nasdaq futures up 0.7 pct.

    Commodities Recap

    Oil fell nearly 2 percent on Monday after U.S. drilling activity rose and fears waned about escalating tensions in the Middle East following air strikes on Syria over the weekend. The oil price had risen nearly 10 percent in the run-up to the strikes, as investors bulked up on assets, such as gold or U.S. Treasuries, that can shield against geopolitical risks. By 0851 GMT on Monday, Brent crude oil futures slipped $1.34 to $71.24 a barrel, while U.S. crude futures were down $1.16 at $66.23 a barrel.

    Gold steadied on Monday, surrendering gains made in earlier trade on the back on this weekend's air strikes on Syria, as financial markets wagered the latest U.S.-led intervention would not escalate into a wider conflict. Spot gold was at $1,344.34 an ounce at 0930 GMT, little changed from late on Friday but off an earlier peak of $1,348.69. U.S. gold futures were 0.1 percent lower at $1,346.80 an ounce.

    Treasuries Recap

    The German bunds slumped on Monday as investors wait to watch the country’s ZEW economic sentiment index for the month April and Eurozone’s CPI data for March, scheduled to be released on April 17 and April 18 by 09:00GMT respectively. The German 10-year bond yields, which move inversely to its price, jumped 2-1/2 basis points to 0.53 percent, the yield on 30-year note also climbed 2-1/2 basis points to 1.16 percent and the yield on short-term 2-year hovered around -0.56 percent by 08:40GMT.

    The Japanese government bonds remained flat Monday as investors wait to watch the country’s trade balance data for the month of March and the national consumer price inflation (CPI) data for the similar period, scheduled to be released on April 17 and April 19 by 23:50GMT and 23:30GMT respectively. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.04 percent, the yield on the long-term 30-year note nearly steadied at 0.70 percent and the yield on short-term 2-year remained flat at -0.15 percent by 04:50 GMT.

    U.S. two-year treasury yield rises to its highest in almost 10 years at 2.386 pct , up 2 bps.

    New Zealand government bonds eased, sending yields 1.5 basis points higher towards the long end of the curve.

    Australian government bond futures dipped, with the three-year bond contract off 1 tick at 97.770. The 10-year contract lost half a tick to 97.2500.

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