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Europe roundup: Sterling steadies as UK wage growth beats forecasts, Swiss Franc, Yen ease Amid renewed optimism over U.S.-China trade talks, European shares surge - Tuesday, June 11th, 2019 

Source FxWire Pro - Media Round Ups Tuesday, 11 Jun, 2019 11:50:12 GMT

Market Roundup

  • EUR/USD 0.1%, USD/JPY 0.22%, GBP/USD 0.32%, EUR/GBP -0.21%
  • DXY -0.01%, DAX 1.34%, FTSE 0.47%, Brent 0.14%, Gold -0.4%
  • China says will respond if U.S. escalates trade tension
  • ECB's Rehn: tiering, rates cut, more QE all on the table
  • Great Britain May Claimant Count Unemployment Change, 23.2k, 22.9k f'cast, 24.7k prev
  • Great Britain Apr ILO Unemployment Rate, 3.8%, 3.8% f'cast, 3.8% prev
  • Great Britain Apr Employment Change, 32k, 10k f'cast, 99k prev
  • Great Britain Apr Avg Wk Earnings 3M YY, 3.1%, 3.0% f'cast, 3.2% prev
  • Great Britain Apr Avg Earnings (Ex-Bonus), 3.4%, 3.1% f'cast, 3.3% prev
  • EZ Jun Sentix Index, -3.3, 2.9 f'cast, 5.3 prev
  • China to stabilize yuan with Hong Kong bill issue

Economic Data Ahead

  • (0830 ET/1230 GMT) The U.S. producer price index is likely to have increased 0.2 percent in May, while in the 12 months through the same period, it is expected to have advanced 2.0 percent. PPI excluding food and energy probably edged up 0.2 percent after a 0.1 percent increase in April.
  • (1000 ET/1400 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 June. The indicator rose to 58.6 in May.
  • (1730 ET/2130 GMT) API reports its weekly crude oil stock.

Key Events Ahead

  • No Significant Event Scheduled

FX Beat

DXY: The dollar index steadied after falling to a 10-1/2 week low earlier in the week, as markets are only pricing in about a 20 percent chance of a Fed interest rate cut in June.  The greenback against a basket of currencies traded flat at 96.76, having touched a low of 96.46 on Friday, its lowest since Mar. 25. FxWirePro's Hourly Dollar Strength Index stood at 13.95 (Neutral) by 1000 GMT.

EUR/USD: The euro rose, reversing some of its previous session losses, as Italy's coalition leaders agreed to work together to avert European Union disciplinary action over Rome's worsening public finances following a meeting with Prime Minister Giuseppe Conte. The European currency traded 0.05 percent up at 1.1314, having touched a high of 1.1347 on Friday, its highest since Mar. 22. FxWirePro's Hourly Euro Strength Index stood at 50.41 (Bullish) by 1000 GMT. Immediate resistance is located at 1.1359 (Mar. 18 High), a break above targets 1.1402 (Feb. 16 High). On the downside, support is seen at 1.1263 (Mar. 26 Low), a break below could drag it below 1.1201 (May 14 Low).

USD/JPY: The dollar surged to an 11-day peak, as investors shifted their focus on a Group of 20 summit later this month where Beijing and Washington might make some progress on trade talks. The major was trading 0.3 percent up at 108.72, having hit a high of 108.73 earlier, its highest since May 31. FxWirePro's Hourly Yen Strength Index stood at -90.97 (Slightly Bearish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. producer price index. Immediate resistance is located at 108.87 (50.0% retracement of 109.92 and 107.81), a break above targets 109.47 (78.6% retracement). On the downside, support is seen at 107.88 (June 3 Low), a break below could take it lower at 107.51 (Jan. 4 Low).

GBP/USD: Sterling steadied around the 1.2700 handle, after data showed British wages in the three months to April rose faster than expected. Moreover, Bank of England Deputy Governor Ben Broadbent comments, citing that British interest rates are likely to need to rise slightly faster than markets expect if Brexit goes smoothly and the economy grows as expected supported the bid tone around the British pound. The major traded 0.2 percent up at 1.2704, having hit a high of 1.2763 on Friday; it’s highest since May 21. FxWirePro's Hourly Sterling Strength Index stood at 102.86 (Highly Bullish) 1000 GMT.  Immediate resistance is located at 1.2763 (June 7 High), a break above could take it near 1.2798 (May 17 High). On the downside, support is seen at 1.2647 (May 24 Low), a break below targets 1.2580 (May 30 Low). Against the euro, the pound was trading 0.1 percent up at 89.10 pence, having hit a low of 89.32 earlier, it’s lowest since Jan. 15.

USD/CHF: The Swiss franc eased, extending previous session losses, as risk appetite held firm after the United States stepped back from imposing tariffs on Mexico. The major trades 0.2 percent up at 0.9913, having touched a low of 0.9853 on Wednesday; it’s lowest since Jan. 15. FxWirePro's Hourly Swiss Franc Strength Index stood at -18.89 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 0.9987 (April 3 High) and any break above will take the pair to next level till 1.0121 (May 17 High). The near-term support is around 0.9859 (June 7 Low), and any close below that level will drag it till 0.9820 (Dec. 20 Low).

Equities Recap

European shares advanced, as President Donald Trump's decision to hold off on imposing import tariffs on Mexico lifted sentiment, while signs of more government stimulus in China bolstered commodities markets.

The pan-European STOXX 600 index rallied 0.9 percent at 381.54 points, while the FTSEurofirst 300 gained 0.9 percent to 1,502.19 points.

Britain's FTSE 100 trades 0.4 percent up at 7,405.84 points, while mid-cap FTSE 250 surged 0.05 to 19,311.35 points.

Germany's DAX rose 1.3 percent at 12,196.35 points; France's CAC 40 trades 0.8 percent higher at 5,424.73 points

Commodities Recap

Crude oil prices surged as firmer equities and expectations OPEC and its allies will keep withholding supply countered concern about slowing economies and demand. International benchmark Brent crude was trading 0.1 percent higher at $62.42 per barrel by 1048 GMT, having hit a high of $63.81 on Monday, its highest since May 31. U.S. West Texas Intermediate was trading 0.6 percent up at $53.73 a barrel, after rising as high as $54.80 on Monday, its highest since the May 31.

Gold prices eased, having posted its biggest one-day percentage fall in two months in the previous session, as investor risk sentiment revived on the U.S.-Mexico deal. Spot gold was 0.4 percent up at $1,322.15 per ounce by 1050 GMT, having touched a high of $1,348.13 on Friday, its highest since April 19. U.S. gold futures rose 0.3 percent to $1,332.90 an ounce.

Treasuries Recap

The U.S. Treasuries continued downtrend during the afternoon session, ahead of the country’s producer price index (PPI) data for the month of May, scheduled to be released today by 12:30GMT, amid an otherwise silent trading day that witnessed data of little economic significance. The yield on the benchmark 10-year Treasury yield surged 3-1/2 basis points to 2.176 percent, the super-long 30-year bond yields also jumped 3-1/2 basis points to 2.655 percent and the yield on the short-term 2-year traded 3 basis points higher at 1.930 percent.

The United Kingdom’s gilts suffered during European session following a better-than-expected growth in the country’s average wages for the month of April, ahead of a host of speeches by Monetary Policy Committee (MPC) members Saunders, Tenreyro and Broadbent, scheduled for later in the day. The yield on the benchmark 10-year gilts, jumped nearly 3 basis points to 0.868 percent, the super-long 30-year bond yields rose 2 basis points to 1.439 percent and the yield on the short-term 2-year also traded 3-1/2 basis points higher at 0.591 percent.

The German bunds remained mixed during European trading session ahead of a speech by European Central Bank (ECB) President Mario Draghi, scheduled to be held on June 12 by 12:15GMT and the country’s 10-year auction, also due on the same day by 09:40GMT. The German 10-year bond yields, which move inversely to its price, plunged 12 basis points to -0.221 percent, the yield on 30-year note slumped 23 basis points to 0.389 percent and the yield on short-term 2-year suffered 13 basis points to -0.658 percent.

The Japanese government bonds closed lower on the second trading day of the week ahead of the country’s super-long 30-year auction, scheduled to be held on June 13 by 03:35GMT and industrial production data for the month of April, due on the following day by 04:30GMT for further direction in the debt market. At close, the yield on the benchmark 10-year JGB note, which moves inversely to its price, improved to -0.112 percent, the yield on the long-term 30-year hovered around 0.361 percent and the yield on short-term 2-year rose 4 basis points to -0.190 percent.

The Australian government bonds remained flat during early Asian session amid a muted trading session that witnessed data of little economic significance ahead of the country’s employment report for the month of May, scheduled to be released on June 13 by 01:30GMT. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose remained flat at 1.479 percent, the yield on the long-term 30-year bond hovered around 2.123 percent and the yield on short-term 2-year too traded steady at 1.087 percent.

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