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Europe roundup: Euro hits 2-week peak as social democrats sign up with merkel-led German government, investors eye FED randal quarles' speech - Monday, March 5th, 2018

Source FxWire Pro - Media Round Ups Monday, 5 Mar, 2018 13:25:35 GMT
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Market Roundup

  • Eurozone Jan retail sales yy increase to 2.3 % (forecast 2.1 %) vs previous 2.1 % (revised from 1.9 %)
     
  • Eurozone Jan retail sales mm increase to -0.1 % (forecast 0.3 %) vs previous -1 % (revised from -1.1 %)
     
  • Eurozone Mar Sentix index decrease to 24 (forecast 31) vs previous 31.9
     
  • United Kingdom Feb Markit/CIPS service PMI increase to 54.5 (forecast 53.3) vs previous 53
     
  • Eurozone Feb Markit composite final PMI decrease to 57.1 (forecast 57.5) vs previous 57.5
     
  • Eurozone Feb Markit service final PMI decrease to 56.2 (forecast 56.7) vs previous 56.7
     
  • Germany Feb Markit composite final PMI increase to 57.6 (forecast 57.4) vs previous 57.4
     
  • Germany Feb Markit services PMI stays flat at 55.3 (forecast 55.3) vs previous 55.3
     
  • France Feb Markit composite PMI decrease to 57.3 (forecast 57.8) vs previous 57.8
     
  • France Feb Markit services PMI decrease to 57.4 (forecast 57.9) vs previous 57.9
     
  • Italy Feb Markit/ADACI services PMI decrease to 55 (forecast 57) vs previous 57.7
     

Economic Data Ahead

  • (0945 ET/1445 GMT) Financial firm Markit releases final U.S. composite PMI for the month of February. The index stood at 55.9 in the previous month.
     
  • (0945 ET/1445 GMT) Markit Economics reports final U.S. services PMI for the month of February. The index posted a final reading of 55.9 in January.
     
  • (1000 ET/1500 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. non-manufacturing Purchasing Managers' index eased to a final reading of 59.0 in February from 59.9 in January.

Key Events Ahead

  • (1315 ET/1815 GMT) Federal Reserve Vice Chair for Supervision Randal Quarles speaks on "Foreign Bank Regulation" before the Institute of International Bankers Annual Washington Conference, in Washington.

FX Beat

DXY: The dollar index tumbled to a 6-day low after U.S. President Donald Trump last week proposed tariffs on imported steel and aluminium. The greenback against a basket of currencies traded flat at 89.96, having touched a low of 89.93 earlier, its lowest since Feb. 27. FxWirePro's Hourly Dollar Strength Index stood at -32.16 (Neutral) by 1000 GMT.

EUR/USD: The euro rallied to a near 2-week high after Germany's Social Democrats voted to enter a grand coalition with Chancellor Merkel’s conservatives, signalling an end to a period of political uncertainty. However, Italy's prolonged period of political instability capped the upward momentum in the major. The European currency traded 0.1 percent up at 1.2326, having touched a low of 1.2155 on Thursday, its lowest since Jan. 12. FxWirePro's Hourly Euro Strength Index stood at 46.32 (Neutral) by 1000 GMT. Immediate resistance is located at 1.2412 (Feb 20. High), a break above targets 1.2465 (Feb 14 High). On the downside, support is seen at 1.2265 (Mar 1 Low), a break below could drag it lower 1.2221 (Feb 27 Low).

USD/JPY: The dollar slumped for a fourth straight session after Bank of Japan Governor Haruhiko Kuroda said last week the central bank would consider an exit from its ultra-easy monetary policy if it met its inflation target in the next fiscal year from April 2019. The major was trading 0.1 percent down at 105.62, having hit a low of 105.25 on Friday, its lowest since Nov. 2016. FxWirePro's Hourly Yen Strength Index stood at 75.01 (Slightly Bullish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. Markit service and composite PMI, and Fed Quarles' speech. Immediate resistance is located at 106.56 (5-DMA), a break above targets 107.00. On the downside, support is seen at 105.25 (Previous Session Low), a break below could take it lower 104.90.

GBP/USD: Sterling extended gains above the 1.3800 handle, as investors’ awaited clarification from the European Union on how it sees future ties with Britain. The major traded 0.2 percent up at 1.3824, having hit a low of 1.3712 on Thursday, it’s lowest since Jan 12. FxWirePro's Hourly Sterling Strength Index stood at 35.12 (Neutral) by 1000 GMT. Immediate resistance is located at 1.3841 (5-DMA), a break above could take it near 1.3903 (10-DMA). On the downside, support is seen at 1.3700, a break below targets 1.3665. Against the euro, the pound was trading 0.1 percent up at 89.14 pence, having hit a low of 89.51 pence on Friday, it’s lowest since Nov. 28, 2017.

USD/CHF: The Swiss franc rose, extending gains for the third consecutive session as the greenback weakened on U.S. President Donald Trump last week's proposed tariffs. The major trades 0.2 percent down at 0.9360, having touched a low of 0.9338 on Friday, it’s lowest since Feb. 26. FxWirePro's Hourly Swiss Franc Strength Index stood at 17.43 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 0.9401 (5-DMA) and any break above will take the pair to next level till 0.9450. The near-term support is around 0.9338 (Previous Session Low) and any close below that level will drag it till 0.9309.

Equities Recap

European shares rebounded, while the euro rose to a 2-week high after Germany's Social Democrats voted to enter a grand coalition with Chancellor Merkel’s conservatives, signalling an end to a period of political uncertainty.

The pan-European STOXX 600 index gained 0.5 percent to 368.94 points, while the FTSEurofirst 300 index surged 0.6 percent to 1,445.67 points.

Britain's FTSE 100 trades 0.4 percent higher at 7,099.52 points, while mid-cap FTSE 250 rallied 0.6 percent to 19,496.42 points.

Germany's DAX rose 0.6 percent at 11,983.12 points; France's CAC 40 trades 0.5 percent up at 5,158.88 points.

Commodities Recap

Crude oil prices rose, extending previous session gains, ahead of a meeting between OPEC and U.S. shale firms in Houston, raising expectations that oil producers would discuss further how to reduce a global oil glut. International benchmark Brent crude was trading 0.3 percent up at $64.77 per barrel by 0956 GMT, having hit a low of $63.21 on Thursday, its lowest since Feb. 15. U.S. West Texas Intermediate was trading 0.3 percent up at $61.70 a barrel, after rising as low as $60.17 on Friday, its weakest since Feb. 15.

Gold prices rallied to a 6-day peak as investors sought safe-haven asset amid fears of a global trade war and uncertainty surrounding the outcome of elections in Italy. Spot gold rose 0.3 percent to $1,325.40 per ounce at 0959 GMT, having fallen to its lowest level since Jan. 2 at $1,302.68 on Thursday. U.S. gold futures for April delivery rose 0.4 percent to $1,328.20 per ounce.

Treasuries Recap

The U.S. Treasuries gained Monday ahead of the country’s ISM non-manufacturing PMI for the month of February and new FOMC member Quarles’ speech, scheduled to be held later in the day. The yield on the benchmark 10-year Treasuries slipped nearly 1-1/2 basis points to 2.84 percent, the super-long 30-year bond yields fell 1 basis point to 3.12 percent and the yield on the short-term 2-year traded nearly 1 basis point lower at 2.23 percent.

The UK gilts remained narrowly mixed after the country’s services PMI for the month of February beat market expectations ahead of the Annual Budget release, scheduled for March 7 by 12:30GMT. The yield on the benchmark 10-year gilts, slipped nearly 1 basis point to 0.78 percent, the super-long 30-year bond yields remained flat at 1.88 percent and the yield on the short-term 2-year too steadied at 0.78 percent.

The German bunds jumped during early European session despite the formation of a coalition government between the Social Democrats and Chancellor Angela Merkel’s Conservative Party, ending the long-awaited political uncertainty. The German 10-year bond yields, which move inversely to its price, slumped 2 basis points to 0.62 percent, the yield on 30-year note plunged 2-1/2 basis points to 1.27 percent and the yield on short-term 2-year traded nearly 1-1/2 basis points lower at -0.55 percent.

The New Zealand government bonds slumped at the time of closing as investors wooed away from safe-haven buying ahead of the country’s GlobalDairyTrade (GDT) price auction, scheduled to be held on Mach 6 for further direction in the debt market. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 4 basis points to 2.98 percent, the yield on 20-year surged 4-1/2 basis points to 3.50 percent while the yield on short-term 2-year closed 1 basis point higher at 1.93 percent.

The Japanese government bonds rally sharply during early Asian session, following dull sentiments among investors as equities took a slide ahead of the country’s 30-year auction, scheduled to be held on March 6 by 03:45GMT. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 2-1/2 basis points to 0.04 percent, the yield on the long-term 30-year note declined nearly 1-1/2  basis points to 0.75 percent and the yield on short-term 2-year plunged 2 basis points to -0.17 percent.

The Australian bonds traded narrowly mixed as investors await the Reserve Bank of Australia (RBA) monetary policy decision scheduled for March 6. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.723 percent, the yield on the long-term 30-year note rose 1/2 basis point to 3.350 percent and the yield on short-term 2-year down 1 basis point to 1.965 percent.

 

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