Europe Roundup: Sterling rebound as investors await third vote on Brexit deal next week, euro steadies on upbeat EZ CPI, European shares rally – Friday, March 15th, 2019

Market Roundup

  • EUR/USD 0.19%, USD/JPY -0.04%, GBP/USD 0.24%, EUR/GBP -0.08%
  • DXY -0.19%, DAX 0.28%, FTSE 0.53%, Brent 0.09%, Gold 0.44%
  • May's ultimatum to rebels: Long delay to Brexit unless you vote for my deal
  • EU countries want to know UK's Brexit delay plan before approving – Irish finmin
  • Sterling headed for best week since January after Brexit votes
  • Kuroda signals status quo even as BOJ tempers optimism on global growth
  • ECB must rethink policy framework after failing to lift inflation – Rehn
  • Germany Feb HICP Final MM, 0.3%, 0.3% f'cast, -1.0% prev
  • Germany Feb HICP Final YY, 1.5%, 1.5% f'cast, 1.5% prev, 1.4% r'vsd
  • Germany Feb Wholesale Price Index MM, 0.3%, -0.7% prev
  • Italy Feb Consumer Prices Final MM, 0.1%, 0.2% f'cast, 0.2% prev, 0.1% r'vsd
  • Italy Feb Consumer Prices Final YY, 1.0%, 1.1% f'cast, 1.1% prev, 1.0% r'vsd
  • Italy Feb CPI (EU Norm) Final MM, -0.3%, -0.2% f'cast, -0.2% prev, -0.3% r'vsd
  • Italy Feb CPI (EU Norm) Final YY, 1.1%, 1.2% f'cast, 1.2% prev, 1.1% r'vsd
  • China premier says can use interest rates, other policy steps to help economy

Economic Data Ahead

  • (0830 ET/1230 GMT) Statistics Canada releases manufacturing shipments data for the month of January. Manufacturing sales are likely to have increased 0.4 percent after rising 1.3 percent in December.
  • (0915 ET/1315 GMT) The Federal Reserve is likely to report that industrial production rose 0.4 percent in February, after decreasing 0.6 in the prior month.
  • (0915 ET/1315 GMT) The Federal Reserve Board is expected to report that capacity utilization edged up to 78.4 percent in February from 78.2 percent in January.
  • (1000 ET/1400 GMT) The U.S. Labor Department releases Job Openings and Labor Turnover Survey (JOLTS) report for the month of January. The report is expected to show job openings eased to 7.310 million from 7.335 million in December.
  • (1000 ET/1400 GMT) The University of Michigan is likely to report that U.S. preliminary consumer sentiment index rose to 95.3 in March, after posting a final reading of 93.8 in January
  • (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count. 

Key Events Ahead

  • (1140 ET/1540 GMT) Michael Held, BoE executive vice president, is a panelist at the Ethics by Design Conference 2019 in New York

FX Beat

DXY: The dollar index eased ahead of Federal Reserve meeting next week, where policymakers will shed more light on the interest rate outlook. The greenback against a basket of currencies traded 0.1 percent down at 96.66, having touched a low of 96.39 on Wednesday, its lowest since March 4. FxWirePro's Hourly Dollar Strength Index stood at -60.47 (Bearish) by 1000 GMT.

EUR/USD: The euro surged after data showed Eurozone inflation edged higher as expected in February, boosted by more expensive services, food, alcohol and tobacco. The European currency traded 0.2 percent up at 1.1322, having touched a high of 1.1338 on Wednesday, its highest since Mar. 5. FxWirePro's Hourly Euro Strength Index stood at 36.66 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1367 (78.6% retracement of 1.1176 and 1.1496), a break above targets 1.1408 (March 1 High). On the downside, support is seen at 1.1278 (5-DMA), a break below could drag it till 1.1243 (Mar. 12 Low).

USD/JPY: The dollar rallied to a 1-week peak on report that U.S.-China trade talks were making progress, however, news that a summit to seal a trade deal between U.S. President Donald Trump and Chinese President Xi Jinping will not happen at the end of March dented investor sentiment. The major was trading flat at 111.69, having hit a high of 111.90, its highest since March 6. FxWirePro's Hourly Yen Strength Index stood at -73.75 (Bearish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of U.S. industrial production, capacity utilization, and Michigan consumer sentiment index. Immediate resistance is located at 112.13 (Mar. 5 High), a break above targets 112.60 (Dec. 20 High). On the downside, support is seen at 111.11 (Mar. 12 Low), a break below could take it lower at 110.66 (Feb.28 Low).

GBP/USD: Sterling rebounded as investors prepared for Prime Minister Theresa May to renew her efforts to get her twice-rejected Brexit deal approved next week by Britain's parliament. The major traded 0.1 percent up at 1.3259, having hit a high of 1.3380 on Wednesday; it’s highest since June 14. FxWirePro's Hourly Sterling Strength Index stood at 164.56 (Highly Bullish) 1000 GMT. Immediate resistance is located at 1.3380 (Mar. 13 High), a break above could take it near 1.3446 (June 14 High). On the downside, support is seen at 1.3166 (Mar. 4 Low), a break below targets 1.3097 (Mar. 5 Low). Against the euro, the pound was trading 0.1 percent down at 85.40 pence, having hit a high of 84.71 on Wednesday, it’s highest since May 2017.

USD/CHF: The Swiss franc retreated from a 10-day peak, as geopolitical tension eased in Europe and Asia. The major trades 0.1 percent up at 1.0043, having touched a low of 1.0018; it’s lowest since March 5. FxWirePro's Hourly Swiss Franc Strength Index stood at 30.03 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 1.0082 (5-DMA) and any break above will take the pair to next level till 1.0124 (Mar. 7 High). The near-term support is around 1.0001 (February 19 Low), and any close below that level will drag it till 0.9983 (February 25 Low).

Equities Recap

European shares rallied to a fresh 5-month peak after UK lawmakers voted to delay a potentially chaotic exit from the European Union.

The pan-European STOXX 600 index surged 0.3 percent at 379.45 points, while the FTSEurofirst 300 index rallied 0.3 percent to 1,492.59 points.

Britain's FTSE 100 trades 0.5 percent up at 7,217.67 points, while mid-cap FTSE 250 rose 0.6 to 19,397.38 points.

Germany's DAX rose 0.4 percent at 11,630.43 points; France's CAC 40 trades 0.5 percent higher at 5,375.09 points.

Commodities Recap

Crude oil prices rose as production cuts led by OPEC and U.S. sanctions against Venezuela and Iran likely created a slight deficit in global supply in the first quarter. International benchmark Brent crude was trading 0.2 percent up at $67.31 per barrel by 1023 GMT, having hit a high of $68.11 the day before, its highest since Nov. 16. U.S. West Texas Intermediate was trading 0.3 percent higher at $58.70 a barrel, after rising as high as $58.93, its highest since the Nov. 13.

Gold prices surged, recovering from the previous session's decline, as mounting concerns about a slowdown in global economic growth supported the safe-haven's demand. Spot gold gained 0.5 percent to $1,302.63 per ounce at 1026 GMT, and was on track for a small weekly gain for a second consecutive week. U.S. gold futures rose 0.6 percent to $1,302.90 an ounce.

Treasuries Recap

The U.S. Treasuries remained steady during afternoon session amid a muted trading session that witnessed data of little economic significance. The yield on the benchmark 10-year Treasury yield flattened to 2.632 percent, the super-long 30-year bond yields also hovered around 3.047 percent and the yield on the short-term 2-year traded tad higher at 2.465 percent.

The United Kingdom’s gilts slipped slightly during the afternoon session, after the House of Commons voted last night in favour of Prime Minister Theresa May’s request to extend the Article 50 deadline at the EU summit on March 21-22. The yield on the benchmark 10-year gilts, rose nearly 1 basis point to 1.232 percent, the super-long 30-year bond yields flat at 1.732 percent and the yield on the short-term 2-year climbed 1 basis point to 0.782 percent.

The German bunds traded nearly flat during European session of the last trading day of the week after the Eurozone’s consumer price inflation (CPI) for the month of February met market expectations, rising from the previous reading in January. The German 10-year bond yields, which move inversely to its price, remained tad higher at 0.090 percent, the yield on 30-year note remained flat at 0.747 percent and the yield on short-term 2-year too hovered around -0.541 percent.

The Japanese government bonds traded higher at the end of Asian session after the Bank of Japan (BoJ) in its 2-day monetary policy meeting, concluded early today, cut its economic assessment, while maintaining monetary policy on hold, in line with market participants had anticipated. The yield on the benchmark 10-year JGB note, which moves inversely to its price, fell slightly to -0.040 percent, the yield on the long-term 30-year hovered around 0.570 percent and the yield on short-term 2-year edged 1 basis point lower to -0.158 percent.

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