News

Europe Roundup: Sterling halts 4-day rally on doubts over Conservative Party's win in election, greenback rebounds as investors await Fed meeting minutes, European shares rally – Tuesday, November 19th, 2019

Market Roundup

  • European car sales up 8.6% in October
     
  • Caixabank chairman warns of Catalan impact on Spanish economy
     
  • Japan lower house passes U.S. trade deal; auto tariffs still in question
     
  • UK's Johnson drops corporate tax cut plan
     

Economic Data Ahead

  • (0830 ET/1330 GMT) The U.S. Department of Commerce is expected to report that housing starts increased to 1.32 million units in October from 1.256 million units in September.
     
  • (0830 ET/1330 GMT) The U.S. building permits are likely to have decreased to a 1.385 million-unit pace in October from a 1.391 million-unit pace in September.
     
  • (0830 ET/1330 GMT) Statistics Canada releases manufacturing shipments data for the month of September. Manufacturing sales are likely to have decreased 0.6 percent after rising 0.8 percent in August.
     
  • (1630 ET/2030 GMT) API reports its weekly crude oil stock.
     

Key Events Ahead

  • (1630 ET/2130 GMT) Federal Reserve Bank of New York President John C. Williams' speech

FX Beat

DXY: The dollar index rebounded from a 2-week low as investors awaited minutes from the Federal Reserve’s federal open markets committee October meeting due on Wednesday. The greenback against a basket of currencies traded 0.1 percent up at 97.90, having touched a high of 98.45 on Wednesday, its highest since October 15.

EUR/USD: The euro eased, halting a 3-day rally, after the chairman of Spain’s Caixabank said that uncertainty surrounding Catalonia was starting to have an impact on the Spanish economy. The European currency traded 0.05 percent down at 1.1067, having touched a high of 1.1089 on Monday, its highest since November 7. Immediate resistance is located at 1.1091, a break above targets 1.1123. On the downside, support is seen at 1.1039, a break below could drag it below 1.1002.

USD/JPY: The dollar rose, reversing early session losses as investors waited for the release of the minutes of the U.S. central bank meeting at end-October when policymakers had cut interest rates. The major was trading 0.1 percent up at 108.83, having hit a low of 108.24 on Thursday, its lowest since November 4. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. building permits, housing starts, and Fed officials' speeches. Immediate resistance is located at 108.93 (10-DMA), a break above targets 109.15 (November 13 High). On the downside, support is seen at 108.29, a break below could take it near at 108.03.

GBP/USD: Sterling declined after rising for four straight sessions, amid concerns that there will be a minority government and probably be a second referendum if Prime Minister Boris Johnson’s party fails to secure more than half of the seats on its own. The major traded 0.1 percent down at 1.2938, having hit a high of 1.2985 on Monday, it’s highest since November 4. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2975, a break above could take it near 1.3012 (October 21 High). On the downside, support is seen at 1.2884 (5-DMA), a break below targets 1.2859 (10-DMA). Against the euro, the pound was trading 0.1 percent down at 85.56 pence, having hit a high of 85.21 on Monday, it’s highest since May 6.

USD/CHF: The Swiss franc fell to a 1-week low as investor sentiment improved on renewed expectations that Washington and Beijing would sign a phase one deal this month to scale back their 16-month-long trade war. The major trades at 0.2 percent up at 0.9912, having touched a low of 0.9868 on Monday, it’s lowest since November 4. On the higher side, near-term resistance is around 0.9936 and any break above will take the pair to the next level till 0.9983. The near-term support is around 0.9855, and any close below that level will drag it till 0.9815.

Equities Recap

European shares rallied as investors speculate that the United States and China can reach a deal to end their damaging trade war.

The pan-European STOXX 600 index surged 0.7 percent at 409.00 points, while the FTSEurofirst 300 rallied 0.7 percent to 1,601.46 points.

Britain's FTSE 100 trades 1.1 percent up at 7,387.56 points, while mid-cap FTSE 250 surged 1.1 to 20,657.89 points.

Germany's DAX rallied 1.2 percent at 13,369.30 points; France's CAC 40 trades 0.5 percent higher at 5,962.09 points.

Commodities Recap

Crude oil prices declined for the second straight session amid market concerns over limited progress between China and the United States on rolling back trade tariffs and expectations of a rise in U.S. inventories. International benchmark Brent crude was trading 0.3 percent down at $62.05 per barrel by 1014 GMT, having hit a high of $63.63 on Friday, its highest since September 24. U.S. West Texas Intermediate was trading 0.4 percent lower at $56.58 a barrel, after rising as high as $58.06 on Monday, its highest since September 24.

Gold prices plunged after rising to a 1-1/2 week peak earlier in the session on doubts about a trade deal between the United States and China. Spot gold was trading 0.3 percent down at $1,466.29 per ounce by 1018 GMT, having touched a high of $1,475.25 earlier, its highest November 7. U.S. gold futures inched up 0.07 percent to $1,472.90 per ounce.

Treasuries Recap

The U.S. Treasuries remained on the side-lines during the afternoon session amid a relatively quiet day ahead of FOMC member Williams’ speech, scheduled to be delivered today by 14:00GMT. The yield on the benchmark 10-year Treasury yield jumped nearly 2 basis points to 1.826 percent, the super-long 30-year bond yield gained 1 basis point to 2.305 percent and the yield on the short-term 2-year surged 3 basis points to 1.621 percent.

The United Kingdom’s gilts gained during European trading hours as investors remained side-lined amid a muted trading session that witnessed data of little economic significance. However, investors’ attention might turn towards the Bank of England’s (BoE) Monetary Policy Committee (MPC) Treasury Committee Hearings, due on November 21 and the country’s manufacturing and services PMIs for the month of November, both due to be released on the following day for further direction into the debt market. The yield on the benchmark 10-year gilts, slipped nearly 1 basis point to 0.744 percent, the 30-year yield hovered around 1.275 percent and the yield on the short-term 2-year traded nearly 1-1/2 basis points down at 0.567 percent.

The German bunds continued to trade flat during European session amid silent trading hours that barely witnessed any data of major economic significance ahead of the country’s gross domestic product (GDP) for the third quarter of this year and November month manufacturing PMI, both scheduled to be released on November 22 by 07:00GMT and 08:30GMT respectively. The German 10-year bond yield, which moves inversely to its price, hovered around -0.332 percent, the yield on 30-year note traded flat at 0.157 percent and the yield on short-term 2-year too remained steady at -0.629 percent.


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