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Europe roundup: Sterling eases on Brexit transition delay concerns, Dollar index rebounds as U.S. tariff fears ease, markets eye ECB policy meet - Thursday, March 8th, 2018

Source FxWire Pro - Media Round Ups Thursday, 8 Mar, 2018 11:46:32 GMT

Market Roundup

  • U.S. Economy seen growing at 2.8 pct in first quarter vs 3.5 pct estimate on March 1 - Atlanta Fed's GDPNOW model
  • Germany Jan industrial orders mm decrease to -3.9 % (fcast -1.6 %) vs prev 3.8 %
  • Switzerland Feb unemployment rate unadj decrease to 3.2 % vs prev 3.3 %
  • Switzerland Feb unemployment rate adj decrease to 2.9 % (fcast 3 %) vs prev 3 %
  • EU's Katainen says normal trade deals improve market access but UK-EU deal will be another way round
  • EU's Katainen says difficult to see UK financial services being better off outside the EU than at present
  • EU's Katainen says financial sector is ready for all Brexit scenarios, financial firms "realistic" and not taking risks with customers
  • EU Commissioner Dombrovskis says plans in place in case of "cliff edge" Brexit, but base scenario is orderly Brexit
  • EU Commissioner Valdis Dombrovskis says not seen any financial instability due to Brexit so far
  • EU's Katainen says past examples of U.S. Imposing steel tariffs led to "thousands and thousands" of U.S. Job losses
  • EU's Katainen says EU still trying to convince the United States that imposing new tariffs on steel is not a good idea
  • EU Commission vice president Jyrki Katainen says if U.S. Gives steel tariff exemption to Britain, would apply to EU as a whole
  • European commissioner Moscovici says retaliatory measures versus the U.S. Tariffs would be "immediate"

  • German economy minister says we would need to make complaint to WTO
  • German economy minister Zypries tells German TV we will have to respond to U.S. Tariffs

Economic Data Ahead

  • (0745 ET/1245 GMT) The European Central Bank will announce its interest rate decision.
  • (0815 ET/1315 GMT) Canadian Mortgage and Housing Corp will report housing starts for the month of February. The indicator is expected to rise at a seasonally adjusted annualized rate of 216,600 after increasing 216,200 in the previous month.
  • (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 10,000 to a seasonally adjusted 220,000 for the week ended Mar. 2, while continuing claims for the week ended Feb. 23 is expected to decline to 1.910 million from previous 1.931 million.
  • (0830 ET/1330 GMT) The Statistics Canada is likely to report that building permits rose 1.3 percent in January, compared with a jump of 4.8 percent in the month ago.
  • (0830 ET/1330 GMT) The Statistics Canada releases its New Housing Price Index (NHPI) for the month of January. The index stayed flat in December.
  • (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending March 2.

Key Events Ahead

  • (0830 ET/1330 GMT) The European Central Bank President Mario Draghi and Vice President Vitor Constancio's press conference
  • (1100 ET/1600 GMT) The Bank of Canada Governor Stephen Poloz's speech
  • (1535 ET/2035 GMT) The Bank of Canada Deputy Governor Tim Lane's speech

FX Beat

DXY: The dollar index steadied as investors awaited more details on U.S. President Donald Trump's proposed steel and aluminium tariffs. The greenback against a basket of currencies traded 0.2 percent up at 89.81, having touched a low of 89.41 the day before, its lowest since Feb. 20. FxWirePro's Hourly Dollar Strength Index stood at 28.43 (Neutral) by 1000 GMT.

EUR/USD: The euro declined as investors turned cautious ahead of European Central Bank policy meeting, where it is expected to stand pat, however, traders will eye for clues about the speed and timing of monetary tightening. The European currency traded 0.2 percent down at 1.2381, having touched a high of 1.2445 on Wednesday, its highest since Feb. 16. FxWirePro's Hourly Euro Strength Index stood at 71.91 (Bullish) by 1000 GMT. Investors’ attention will remain on the ECB interest rate decision, ahead of U.S. unemployment benefit claims. Immediate resistance is located at 1.2465 (Feb 14 High), a break above targets 1.2510 (Feb 15 High). On the downside, support is seen at 1.2347 (5-DMA), a break below could drag it lower 1.2310 (10-DMA).

USD/JPY: The dollar consolidated within narrow ranges as Wednesday's data on U.S. private hiring and labour costs reinforced the view of underlying strength in the economy. The major was trading flat at 106.09, having hit a low of 105.25 on Friday, its lowest since Nov. 2016. FxWirePro's Hourly Yen Strength Index stood at -41.78 (Neutral) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. unemployment benefit claims. Immediate resistance is located at 106.48 (10-DMA), a break above targets 107.10 (21-DMA). On the downside, support is seen at 105.35 (Mar. 5 Low), a break below could take it lower 104.90.

GBP/USD: Sterling declined after rising for five consecutive sessions, on growing concerns that disagreement over the European Union's draft guidelines for a trade pact with Britain would prevent a transition deal being finalized at a summit later this month. The major traded 0.2 percent up at 1.3872, having hit a high of 1.3929 on Tuesday, it’s highest since Feb 27. FxWirePro's Hourly Sterling Strength Index stood at 3.78 (Neutral) by 1000 GMT. Immediate resistance is located at 1.3929 (Mar. 6 High), a break above could take it near 1.3996 (Feb 27 Low). On the downside, support is seen at 1.3841 (5-DMA), a break below targets 1.3766 (Mar. 5 Low). Against the euro, the pound was trading 0.05 percent up at 89.23 pence, having hit a low of 89.67 pence on Wednesday, it’s lowest since Nov. 28, 2017.

USD/CHF: The Swiss franc declined to a 1-week low as the greenback recovered after the White House said some countries could be exempted from planned U.S. import tariffs. The major trades 0.2 percent up at 0.9455, having touched a low of 0.9338 on Friday, it’s lowest since Feb. 26. FxWirePro's Hourly Swiss Franc Strength Index stood at -95.18 (Slightly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 0.9464 and any break above will take the pair to next level till 0.9490. The near-term support is around 0.9393 (10-DMA) and any close below that level will drag it till 0.9345 (Mar.  5 Low).

Equities Recap

European shares rose despite some disappointing earnings updates, while the greenback steadied against a basket of currencies as fears of a trade war eased.

The pan-European STOXX 600 index gained 0.2 percent to 373.28 points, while the FTSEurofirst 300 index rose 0.1 percent to 1,459.73 points.

Britain's FTSE 100 trades 0.05 percent lower at 7,156.38 points, while mid-cap FTSE 250 eased 0.3 percent to 19,838.25 points.

Germany's DAX declined 0.4 percent at 12,197.15 points; France's CAC 40 trades 0.2 percent down at 5,198.83 points.

Commodities Recap

Crude oil prices declined, extending previous session losses, weighed down by record U.S. crude production and rising inventories. International benchmark Brent crude was trading 0.3 percent down at $64.33 per barrel by 1031 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 $61.18 a barrel, after rising as low as $60.17 on Friday, its weakest since Feb. 15.

Gold prices consolidated within narrow ranges as investors awaited more details on U.S. President Donald Trump's proposed steel and aluminium tariffs and the outcome of the European Central Bank's policy meeting. Spot gold traded flat at $1,325.57 per ounce by 1033 GMT, having hit $1,340.35 an ounce on Wednesday, its highest since Feb. 26. U.S. gold futures were up 0.1 percent at $1,329.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.882 percent lower by 0.001 bps, while 5-year yield was 0.005 bps down at 2.643 percent.

The German bunds remained mixed as investors, now, shall be focusing on the European Central Bank’s (ECB) monetary policy decision, scheduled to be unveiled today by 12:45GMT. The German 10-year bond yields, which move inversely to its price, edged 1/2 basis point higher to 0.66 percent, the yield on the 30-year note remained flat at 1.30 percent and the yield on short-term 2-year hovered around -0.53 percent.

The UK gilts plunged in muted trading session as investors wait to watch the country’s manufacturing production for the month of January and trade balance for the similar period, scheduled to be released on March 9 by 09:30GMT respectively. The yield on the benchmark 10-year gilts, jumped 1-1/2 basis points to 1.50 percent, the super-long 30-year bond yields surged 1 basis point to 1.91 percent and the yield on the short-term 2-year too traded nearly 2 basis points higher at 0.82 percent.

The Japanese government bonds traded in a tight range as investors await the Bank of Japan’s (BoJ) two-day monetary policy meeting, due to be concluded on March 9 will add further direction to the debt market. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded flat at 0.05 percent, the yield on the long-term 30-year note rose 1/2  basis point to 0.75 percent and the yield on short-term 2-year traded 1/2 basis point higher at -0.15 percent.

The Australian government bonds slumped following better-than-expected trade balance data from the month of January, which return to surplus after registering huge deficit in December last year. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1 basis point to 2.817 percent, the yield on the long-term 30-year note climbed 1 basis point to 3.395 percent and the yield on short-term 2-year up 1 basis point to 2.011 percent.

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