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Europe roundup: Sterling steadies amid renewed Brexit concerns, Dollar index eases as investors await cues on Trump's tariff proposal, European shares off 6-month low - Tuesday, March 6th, 2018

Source FxWire Pro - Media Round Ups Tuesday, 6 Mar, 2018 11:27:04 GMT

Market Roundup

  • Switzerland Feb CPI yy decrease to 0.6 % (forecast 0.6 %) vs previous 0.7 %
  • Switzerland Feb CPI mm increase to 0.4 % (forecast 0.2 %) vs previous -0.1 %
  • Sweden Jan construction prod yy decrease to 3.6 % vs previous 4.6 % (revised from 5.3 %)
  • Sweden Jan construction prod mm decrease to -0.6 % vs previous 0.3 % (revised from 0.6 %)
  • Sweden Jan services production yy increase to 4.4 % vs previous 0.8 % (revised from 2.6 %)
  • Sweden Jan industrial production value mm increase to 1.2 % vs previous 0.8 % (revised from 0.5 %)
  • Sweden Jan industrial production value yy increase to 7.7 % vs previous 7.6 % (revised from 7.5 %)
  • Sweden Jan private production yy increase to 4.5 % vs previous 3.9 % (revised from 5.3 %)
  • Sweden Jan new orders manufacturing yy increase to 8.3 % vs previous 6.3 % (revised from 5.8 %)
  • Sweden Jan private production mm increase to 0.5 % vs previous -0.4 % (revised from -1 %)

Economic Data Ahead

  • (1000 ET/1500 GMT) The United States is likely to report that factory orders decreased 1.3 percent in January, after posting a rise of 1.7 percent in the prior month.
  • (1000 ET/1500 GMT) The Richard Ivey School of Business releases Canada's seasonally adjusted Ivey Purchasing Managers Index for the month of February. The index posted a reading of 55.2 in the prior month.
  • (1000 ET/1500 GMT) The Investor's Business Daily (IBD)/ TechnoMetrica Institute of Policy and Politics (TIPP) will release U.S. Economic Optimism index for the month of March. The indicator rose to 56.7 in February.
  • (1630 ET/2130 GMT) API reports its weekly crude oil stock.
  • (1830 ET/ 2330 GMT) The Australian Industry Group (AiG) releases its Performance of Construction Index for the month of February. The index stood at 54.3 in the month of January.
  • (1850 ET/2350 GMT) Japan releases Foreign Exchange Reserves report for the month of February.

Key Events Ahead

  • (0730 ET/1230 GMT) Federal Reserve Bank of New York President William Dudley participates in USVI Nonprofit Leaders Breakfast Roundtable to discuss economic conditions and recovery efforts in the aftermath of hurricanes Irma and Maria in St. Thomas, Virgin Islands.
  • (1315 ET/1815 GMT) Bank of England MPC Member Andrew G Haldane's Speech.
  • (1635 ET/2135 GMT) Reserve Bank of Australia Governor Philip Lowe's Speech.
  • (1900 ET/0000 GMT) Federal Reserve Board Governor Lael Brainard speaks on "Economic and Monetary Policy Outlook" before the Money Marketeers of New York University Forum in New York.
  • (2030 ET/0130 GMT) Federal Reserve Bank of Dallas President Robert Kaplan participates in a moderated Q&A before CERA Week event, in Houston, Texas.

FX Beat

DXY: The dollar index edged down as investors awaited further news regarding the tariffs proposed by U.S. President Donald Trump. The greenback against a basket of currencies traded 0.1 percent down at 89.92, having touched a low of 89.83 the day before, its lowest since Feb. 27. FxWirePro's Hourly Dollar Strength Index stood at -62.47 (Bearish) by 0500 GMT.

EUR/USD: The euro extended gains for the fourth straight session, as the negative impact from Italy's election results was offset by Germany's Social Democrats agreeing to join Chancellor Angela Merkel's conservatives. The European currency traded flat at 1.2332, having touched a low of 1.2155 on Thursday, its lowest since Jan. 12. FxWirePro's Hourly Euro Strength Index stood at 112.64 (Highly Bullish) by 0900 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 declined, reversing some of its previous session gains, weighed down by a mildly weaker tone around the U.S. Treasury bond yields. The major was trading 0.3 percent down at 105.94, having hit a low of 105.25 on Friday, its lowest since Nov. 2016. FxWirePro's Hourly Yen Strength Index stood at 65.34 (Bullish) by 0900 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. factory orders and Fed officials' speeches. Immediate resistance is located at 106.77 (10-DMA), a break above targets 107.40 (21-DMA). On the downside, support is seen at 105.35 (Previous Session Low), a break below could take it lower 104.90.

GBP/USD: Sterling surged, extending gains for the fourth straight session, amid ongoing uncertainty about whether Britain and the European Union can agree on a transition deal later this month for when the UK leaves the EU next year.  The major traded 0.1 percent up at 1.3859, having hit a low of 1.3712 on Thursday, it’s lowest since Jan 12. FxWirePro's Hourly Sterling Strength Index stood at 53.23 (Bullish) by 0900 GMT. Investors’ focus will remain on the BoE member Haldane speech, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3888 (10-DMA), a break above could take it near 1.3917 (21-DMA). On the downside, support is seen at 1.3711, a break below targets 1.3665. Against the euro, the pound was trading flat at 89.10 pence, having hit a low of 89.51 pence on Friday, it’s lowest since Nov. 28, 2017.

USD/CHF: The Swiss franc consolidated within a narrow range, as receding fears about a trade war stemming underpinned risk sentiment. The major trades 0.05 percent up at 0.9401, having touched a low of 0.9338 on Friday, it’s lowest since Feb. 26. FxWirePro's Hourly Swiss Franc Strength Index stood at -90.73 (Slightly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 0.9459 and any break above will take the pair to next level till 0.9490. The near-term support is around 0.9345 (Previous Session Low) and any close below that level will drag it till 0.9309.

Equities Recap

European shares bounced back from 6-months lows on dealmaking and earnings updates, while the euro steadied on German coalition deal.

The pan-European STOXX 600 index gained 0.8 percent to 373.69 points, while the FTSEurofirst 300 index surged 0.8 percent to 1,464.28 points.

Britain's FTSE 100 trades 0.9 percent higher at 7,185.05 points, while mid-cap FTSE 250 rallied 0.6 percent to 19,683.80 points.

Germany's DAX rose 1.2 percent at 12,236.64 points; France's CAC 40 trades 0.7 percent up at 5,203.76 points.

Commodities Recap

Crude oil prices declined after rising for two straight sessions despite robust demand forecasts. International benchmark Brent crude was trading 0.4 percent up at $65.30 per barrel by 0914 GMT, having hit a low of $63.21 on Thursday, its lowest since Feb. 15. U.S. West Texas Intermediate was trading 0.2 percent down at $62.44 a barrel, after rising as low as $60.17 on Friday, its weakest since Feb. 15.

Gold prices edged up as investors covered short positions amid fears about a global trade war on U.S. President Donald Trump's plan to impose steel and aluminum tariffs. Spot gold was up 0.2 percent at $1,322.81 per ounce as of 0916 GMT, having fallen to its lowest level since Jan. 2 at $1,302.68 on Thursday. U.S. gold futures for April delivery rose 0.2 percent to $1,321.90 per ounce.

Treasuries Recap

The U.S. Treasuries remained flat ahead of a host of speeches by FOMC members Dudley and Brainard scheduled for later in the day. The yield on the benchmark 10-year Treasuries rose 1/2 basis point to 2.88 percent, the super-long 30-year bond yields remained flat at 3.15 percent and the yield on the short-term 2-year too steadied at 2.23 percent.

The UK gilts slumped as investors’ risk sentiments improved, following the progress in Brexit negotiations and the demand by Prime Minister Theresa May for a free trade deal. The yield on the benchmark 10-year gilts, jumped nearly 2-1/2 basis points to 1.52 percent, the super-long 30-year bond yields surged 3 basis points to 1.93 percent and the yield on the short-term 2-year too traded 1 basis point higher at 0.82 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 5-1/2 basis points to 3.04 percent, the yield on 20-year surged 6 basis points to 3.56 percent and the yield on short-term 2-year closed 3 basis points higher at 1.96 percent.

The Japanese government bonds slid as investors hope to see a slight upward push in the country’s fourth-quarter gross domestic product (GDP), scheduled to be released on March 7. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose nearly 1 basis point to 0.05 percent, the yield on the long-term 30-year note flattened at 0.74 percent and the yield on short-term 2-year traded tad higher at -0.16 percent.

The Australian bonds plunged during early Asian session, tracking similar overnight movement in the U.S. Treasuries as investors hope to avoid a trade war over the coming months, thus weighing on safe-haven instruments. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 6-1/2 basis points to 2.82 percent, the yield on the long-term 30-year note surged 8 basis points to 3.41 percent and the yield on short-term 2-year traded 4-1/2 basis points up at 2.01 percent.

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