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Europe roundup: Sterling eases on Brexit transition deal concerns, Dollar index at 6-week peak on FED rate hike speculation, European shares slump - Thursday, March 1st, 2018

Source FxWire Pro - Media Round Ups Thursday, 1 Mar, 2018 11:43:27 GMT

Market Roundup

  • Eurozone Jan unemployment rate stays flat at 8.6 % (forecast 8.6 %) vs previous 8.6 % (revised from 8.7 %)
  • United Kingdom Jan mortgage lending decrease to 3.389 bln gb (forecast 3.6 bln gb) vs previous 3.524 bln gb (revised from 3.683 bln gb)
  • United Kingdom Jan mortgage approvals increase to 67.478 k (forecast 62 k) vs previous 61.692 k (revised from 61.039 k)
  • United Kingdom Jan M4 money supply increase to 1.5 % vs previous -0.6 %
  • United Kingdom Jan BOE consumer credit decrease to 1.357 bln gb (forecast 1.4 bln gb) vs previous 1.58 bln gb (revised from 1.52 bln gb)
  • United Kingdom Feb Markit/CIPS Manufacturing PMI decrease to 55.2 (forecast 55 ) vs previous 55.3
  • Eurozone Feb Markit Manufacturing final PMI increase to 58.6 (forecast 58.5 ) vs previous 58.5
  • Germany Feb Markit/BME Manufacturing PMI increase to 60.6 (forecast 60.3 ) vs previous 60.3
  • France Feb Markit Manufacturing PMI decrease to 55.9 (forecast 56.1 ) vs previous 56.1
  • Switzerland Feb manufacturing PMI increase to 65.5 (forecast 64 ) vs previous 65.3
  • Switzerland Jan retail sales yy decrease to -1.4 % vs previous 0.7 % (revised from 0.6 %)
  • Spain Feb manufacturing PMI increase to 56 (forecast 54.7 ) vs previous 55.2
  • Switzerland Q4 GDP qq decrease to 0.6 % (forecast 0.6 %) vs previous 0.7 % (revised from 0.6 %)
  • Switzerland Q4 GDP yy increase to 1.9 % (forecast 1.8 %) vs previous 1.2 % (revised from 1.2 %)
  • United Kingdom Feb nationwide house price yy decrease to 2.2 % (forecast 2.6 %) vs previous 3.2 %
  • United Kingdom Feb nationwide house price mm decrease to -0.3 % (forecast 0.2 %) vs previous 0.8 % (revised from 0.6 %)

Economic Data Ahead

  • (0830 ET/1330 GMT)  The U.S. Commerce Department releases personal income figures for January, which is expected to rise 0.3 percent, after gaining 0.4 percent in the previous month.
  • (0830 ET/1330 GMT) The U.S. Commerce Department releases the personal consumption expenditures (PCE) price index for the month of January. The index rose at an annualized rate of 1.6 percent in the prior month while core PCE is likely to have increased 0.3 percent after surging 0.2 percent in the previous month.
  • (0830 ET/1330 GMT) The U.S. Personal spending is likely to rise 0.2 percent in the month of January, after advancing 0.4 percent in December.
  • (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 4,000 to a seasonally adjusted 226,000 for the week ended Feb. 23, while continuing claims for the week ended Feb. 16 is expected to rise to 1.930 million from a previous reading of 1.875 million.
  • (0830 ET/1330 GMT) The Statistics Canada is likely to report that current account deficit narrowed to C$17.80 billion in the fourth quarter, compared with a deficit of C$19.35 billion in the previous quarter.
  • (0930 ET/1430 GMT) The Markit will release Canada's Manufacturing PMI for the Month of February. The indicator stood at 55.9 in the prior month.
  • (0945 ET/1445 GMT) Financial firm Markit releases U.S. Manufacturing PMI for the month of February. The index is likely to show a final reading of 55.9 after posting similar gains in the previous month.
  • (1000 ET/1500 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. manufacturing Purchasing Managers' index declined to 58.7 in February from a revised 59.1 in January.
  • (1000 ET/1500 GMT) The Commerce Department is likely to report that U.S. construction spending increased 0.3 percent in January after rising 0.7 percent in the previous month.
  • (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending February 23.
  • N/A Autodata Corp is expected to report that U.S. auto sales figures rose to an annualized rate of 17.20 million units in February from 17.12 million units in January.

Key Events Ahead

  • (1000 ET/1500 GMT) U.S. Federal Reserve chair Jerome Powell's testimony.
  • (1100 ET /1600 GMT) Federal Reserve Bank of New York President William Dudley speaks on trade and globalization before an event organized by the Central Bank of Brazil in Sao Paulo, Brazil.

FX Beat

DXY: The dollar index rallied to a 6-week peak on growing bets that interest rates will be hiked four times this year in the United States. The greenback against a basket of currencies traded 0.1 percent up at 90.75, having touched a high of 90.78 earlier, its highest since Jan. 18. FxWirePro's Hourly Dollar Strength Index stood at 139.97 (Highly Bullish) by 1000 GMT.

EUR/USD: The euro slumped to a 6-week low after data showed the Eurozone's manufacturing growth slowed a little further in February. The economy's IHS Markit's final manufacturing Purchasing Managers' Index fell to 58.6 in February from 59.6, just below an earlier flash estimate of 58.5.  The European currency traded 0.05 percent down at 1.2191, having touched a low of 1.2180, its lowest since Jan. 18. FxWirePro's Hourly Euro Strength Index stood at -45.65 (Neutral) by 1000 GMT. Immediate resistance is located at 1.2273 (5-DMA), a break above targets 1.2347 (21-DMA). On the downside, support is seen at 1.2165, a break below could drag it lower 1.2120.

USD/JPY: The dollar edged up against the Japanese yen, as the hawkish-sounding comments from the new Fed Chair Jerome Powell underpinned growing bets that the Fed could raise interest rates faster than previously anticipated. The major was trading 0.1 percent up at 106.77, having hit a high of 107.90 last week, its highest since Feb.14. FxWirePro's Hourly Yen Strength Index stood at 155.43 (Highly Bullish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. personal consumption expenditure- price index, unemployment benefit claims and Manufacturing PMI by Markit and ISM. Immediate resistance is located at 107.90 (Feb 21. High), a break above targets 108.50. On the downside, support is seen at 106.09, a break below could take it lower 105.60.

GBP/USD: Sterling eased to multi-week lows on worries Britain will not secure a Brexit transition deal, while traders awaited Bank of England Governor Carney and UK PM Theresa May's speech due tomorrow. The major traded 0.1 percent down at 1.3747, having hit a low of 1.3727 earlier, it’s lowest since Jan 15. FxWirePro's Hourly Sterling Strength Index stood at -116.11 (Highly Bearish) by 1000 GMT. Immediate resistance is located at 1.3910 (5-DMA), a break above could take it near 1.3971 (21-DMA). On the downside, support is seen at 1.3723, a break below targets 1.3700. Against the euro, the pound was trading 0.1 percent down at 88.68 pence, having hit a low of 88.77 pence, it’s lowest since Feb. 16.

USD/CHF: The Swiss franc slumped to a near 1-month low as the greenback rallied on an upbeat tone from new Federal Reserve chief Jerome Powell on the U.S. economy.  The major trades 0.1 percent up at 0.9456, having touched a high of 0.9461 earlier, it’s highest since Feb. 8. FxWirePro's Hourly Swiss Franc Strength Index stood at 94.46 (Slightly Bullish) by 1000 GMT. On the higher side, near-term resistance is around 0.9467 and any break above will take the pair to next level till 0.9500. The near-term support is around 0.9380 (10-DMA) and any close below that level will drag it till 0.9325.

Equities Recap

European shares plunged following a flurry of uninspiring earnings updates from corporates, while the greenback rose to 6-week highs ahead of Federal Reserve Chair Jerome Powell’s testimony before the Senate Banking Committee.

The pan-European STOXX 600 index declined 0.9 percent to 376.13 points, while the FTSEurofirst 300 index slumped 1.1 percent to 1,471.36 points.

Britain's FTSE 100 trades 0.6 percent lower at 7,190.38 points, while mid-cap FTSE 250 plunged 0.4 percent to 19,618.44 points.

Germany's DAX fell 1.4 percent at 12,265.95 points; France's CAC 40 trades 1.01 percent down at 5,226.66 points.

Commodities Recap

Crude oil prices declined, extending losses for the third straight session as some investors drifted away from riskier assets amid volatile equity markets and a stronger dollar. International benchmark Brent crude was trading 0.2 percent down at $64.51 per barrel by 1015 GMT, having hit a high of $67.86 on Monday, its highest since Feb. 7. U.S. West Texas Intermediate was trading 0.3 percent down at $61.34 a barrel, after rising as high as $64.21 on Monday, its strongest since Feb. 7.

Gold prices slumped to a three-week low, weighed down by a stronger dollar, while investors awaited the second session of Federal Reserve Chairman Jerome Powell's testimony before the Senate Banking Committee. Spot gold was trading 0.6 percent lower at $1,310.66 an ounce at 1017 GMT, having fallen to its lowest level since Feb. 8 at $1,310.19. U.S. gold futures were down 0.2 percent at $1,314.7 per ounce.

Treasuries Recap

The U.S. Treasuries climbed ahead of the country’s initial jobless claims and core personal consumption expenditure (PCE) indicator, besides, Federal Reserve Chair Jerome Powell’s testimony, the ISM manufacturing PMI and FOMC member Dudley’s speech, all scheduled for later today. The yield on the benchmark 10-year Treasuries slumped 3 basis points to 2.84 percent, the super-long 30-year bond yields fell 2 basis points to 3.11 percent and the yield on the short-term 2-year traded nearly 1-1/2 basis points lower at 2.25 percent.

The UK 10-year gilt yields slipped to a one-month low during the mid-European session despite the rise in the country’s manufacturing PMI for the month of February. The yield on the benchmark 10-year gilts slumped nearly 4 basis points to 1.46 percent, the super-long 30-year bond yields plunged 3 basis points to 1.86 percent and the yield on the short-term 2-year traded 2 basis points lower at 0.75 percent.

The German bunds jumped as investors have largely shrugged-off the country’s higher-than-expected manufacturing PMI for the month of February, released today. The German 10-year bond yields, which move inversely to its price, slumped 2-1/2 basis points to 0.63 percent, the yield on 30-year note plunged 3 basis points to 1.28 percent and the yield on short-term 2-year too traded nearly 2 basis points lower at -0.54 percent.

The Japanese government bonds edged higher following firmness in the U.S. Treasuries. Also, investors moved to safe-haven buying following weakness in the riskier assets like equities and oil. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell ½ basis point to 0.042 percent, the yield on the long-term 30-year note also declined 1/2  basis point to 0.757 percent and the yield on short-term 2-year dipped nearly 1/2 basis point to -0.158 percent.

The Australian government bonds gained after new capital expenditure declined in the last quarter of 2017, which is negative for the economy. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 4 basis points to 2.749 percent, the yield on the long-term 30-year note slid 5-1/2 basis point to 3.369 percent and the yield on short-term 2-year down 1 basis point to 2.000 percent. 

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