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Europe Roundup: Sterling consolidates near 1.2800 amid persisting Brexit concerns, euro tumbles ahead of Spanish election, greenback at 3-week peak on U.S.-China trade hopes – Friday, November 8th, 2019

Market Roundup

  • ECB's Vasle: ECB to continue with present policy until conditions improve
     
  • Oil falls amid rising stockpiles
     
  • Gold set for biggest weekly fall in 2-1/2 years

Economic Data Ahead

  • (0815 ET/1315 GMT) Canadian Mortgage and Housing Corp will report housing starts for the month of October. The indicator is expected to rise at a seasonally adjusted annualized rate of 221,200 after increasing 221,200 in the previous month.
     
  • (0830 ET/1330 GMT) Statistics Canada releases the employment report for October. The economy probably added 15,900 jobs, compared to a rise of 53,700 jobs in September, while the participation rate is expected to remain steady at 65.7 percent.
     
  • (0830 ET/1330 GMT) Canada's unemployment rate is expected to stay unchanged at 5.5 percent for the month of October.
     
  • (0830 ET/1330 GMT) Statistics Canada is likely to report that building permits dropped 2.0 percent in September, after rising 6.1 percent in August.
     
  • (1000 ET/1500 GMT) The U.S. Census Bureau is likely to report that wholesale inventories declined 0.3 percent in September, having posted a similar decline in the prior month.
     
  • (1000 ET/1500 GMT) The University of Michigan is likely to report that U.S. preliminary consumer sentiment index rose to 95.9 in November, after posting a final reading of 95.5 in October.
     
  • (1300 ET/1800 GMT) Baker Hughes reports U.S. Oil Rig Count. 

Key Events Ahead

  • (0830 ET/1330 GMT) Federal Reserve Board of Governors member Lael Brainard's speech

FX Beat

DXY: The dollar index rallied to a 3-week high ahead of the University of Michigan consumer survey in the United States. Investors expect the survey to rise slightly higher to 95.9 in November from 95.5 in October. The greenback against a basket of currencies traded 0.2 percent up at 98.29, having touched a high of 98.30 earlier, its highest since October 16.

EUR/USD: The euro slumped to an over 3-week low as investors remained cautious ahead of the Spanish election on Sunday, the country’s fourth election in four years. The European currency traded 0.1 percent down at 1.1037, having touched a low of 1.1034 earlier, its lowest since October 16. Immediate resistance is located at 1.1096 (5-DMA), a break above targets 1.1123. On the downside, support is seen at 1.1022, a break below could drag it below 1.1002.

USD/JPY: The dollar rallied after officials on Thursday said that China and the United States have agreed to roll back tariffs on each others’ goods if the first phase of a trade deal is reached between the countries. The major was trading 0.1 percent up at 109.28, having hit a high of 109.48 on Thursday, its highest since May 31. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. wholesale inventories, Michigan prelim consumer sentiment index and Fed Brainard's speech. Immediate resistance is located at 109.62 (May 31 High), a break above targets 109.92 (May 30 High). On the downside, support is seen at 108.82 (5-DMA), a break below could take it near at 108.45.

GBP/USD: Sterling consolidated above the 1.2800 handle as investors await political developments ahead of Britain’s December 12 election. The major traded flat at 1.2805, having hit a low of 1.2794 on Thursday, it’s lowest since October 24. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2874 (10-DMA), a break above could take it near 1.2949 (October 24 High). On the downside, support is seen at 1.2748, a break below targets 1.2700. Against the euro, the pound was trading flat at 86.15 pence, having hit a high of 85.85 on Tuesday, it’s highest since October 22.

USD/CHF: The Swiss franc declined, hovering towards a 3-week low hit in the previous session after mixed signals on U.S.-China trade left investors uncertain on whether the two sides were really getting close to signing a deal. The major trades at 0.1 percent up at 0.9963, having touched a high of 0.9975 earlier, it’s highest since October 16. On the higher side, near-term resistance is around 0.9983 and any break above will take the pair to the next level till 1.0007. The near-term support is around 0.9929, and any close below that level will drag it till 0.9906 (5-DMA).

Equities Recap

European shares slumped weighed down by doubts over the broader outlook for global growth and President Donald Trump’s willingness to come to terms with Beijing over trade.

The pan-European STOXX 600 index plunged 0.3 percent at 405.37 points, while the FTSEurofirst 300 declined 0.3 percent to 1,589.32 points.

Britain's FTSE 100 trades 0.3 percent down at 7,387.53 points, while mid-cap FTSE 250 eased 0.3 to 20,372.36 points.

Germany's DAX eased 0.2 percent at 13,264.83 points; France's CAC 40 trades 0.2 percent lower at 5,879.16 points.

Commodities Recap

Crude oil futures declined amid lingering uncertainty on whether, and when, the United States and China will agree a long-awaited deal to end their bitter trade dispute and rising crude inventories in the U.S. International benchmark Brent crude was trading 1.5 percent down at $61.31 per barrel by 1044 GMT, having hit a low of $61.19 earlier, its lowest since November 1. U.S. West Texas Intermediate was trading 1.5 percent down at $56.22 a barrel, after falling as low as $56.06 earlier, its lowest since November 4.

Gold prices plunged and were set for their biggest weekly decline in 2-1/2-years as optimism for a China U.S. trade deal boosted risk-on sentiment. Spot gold was trading 0.1 percent down at $1,466.31 per ounce by 1047 GMT and was poised for its biggest weekly decline since May 2017. U.S. gold futures were up 0.2 percent at $1,470.10 per ounce.

Treasuries Recap

The U.S. Treasuries gained during the afternoon session amid a muted trading day that witnessed data of little economic significance. However, a speech by Federal Open Market Committee (FOMC) member Brainard, due to be delivered today at 13:30GMT, shall provide further direction into the debt market. The yield on the benchmark 10-year Treasury yield slipped nearly 1-1/2 basis points to 1.909 percent, the super-long 30-year bond yield suffered 2 basis points to 2.380 percent and the yield on the short-term 2-year traded nearly 1 basis point lower at 1.670 percent.

The German bunds remained flat during European trading session after the country’s trade balance for the month of September cheered market investors amid ongoing Brexit uncertainties. The German 10-year bond yield, which move inversely to its price, hovered around -0.247 percent, the yield on 30-year note remained flat at 0.254 percent while the yield on short-term 2-year traded tad down at -0.623 percent.

The Australian government bonds during Asian session of the last trading day of the week after risk sentiments were lifted, following trade deal optimism amid ongoing Brexit uncertainties. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped 8-1/2 basis points to 1.296 percent, the yield on the long-term 30-year bond surged 8 basis points to 1.878 percent and the yield on short-term 2-year gained 2 basis points to 0.893 percent.


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