News

Europe Roundup: Sterling falls on mounting rate cut bets ,European shares flat ,Gold dips, Oil extends decline as supply disruption fears recede-January 14th,2020

Market Roundup 

• Spanish 12-Month Letras Auction -0.405%,-0.456% previous    

•  Spanish 6-Month Letras Auction -0.363%,-0.448% previous    

• Italian 3-Year BTP Auction 0.18%,0.22% previous            

Looking Ahead – Economic Data (GMT)    

• 13:55  US Redbook (MoM)  -2.6% previous

• 13:55 US Redbook (YoY)  7.2% previous

• 15:00 US  IBD/TIPP Economic Optimism 57.3 forecast, 57.0 previous  
     
• 19:00  US  Dec Federal Budget Balance  -15.0B forecast, -209.0B previous
                     
Looking Ahead – Events, Other Releases (GMT)

• N/A FOMC Member Williams Speaks

Fx Beat

EUR/USD: The euro declined against the U.S. dollar on Tuesday, on hopes of an easing of trade tensions between the United States and China. The United States and China, the world’s two biggest economies, are just a day away from signing a Phase 1 trade agreement. In a sign of easing tensions, the U.S. Treasury said on Monday that China should no longer be designated a currency manipulator.. The euro was down 0.19 percent at $1.1131.Immediate resistance can be seen at 1.1136 (Jan 13th High), an upside break can trigger rise towards 1.1150 (9 DMA).On the downside, immediate support is seen at 1.1091 (50 DMA), a break below could take the pair towards 1.1000 (Psychological level).

GBP/USD: The British pound declined against  the dollar on Tuesday, as investors worried about the state of the economy and speculated that it would lead the Bank of England to cut interest rates this month.Sterling fell sharply on Monday after another BoE policymaker had said he would vote for a cut to rates later this month unless economic data improved significantly. The pound fell to $1.2975, down 0.64 percent on the day. Immediate resistance can be seen at 1.3059 (5 DMA), an upside break can trigger rise towards 1.3098 (11 DMA).On the downside, immediate support is seen at 1.2961 (50 DMA), a break below could take the pair towards 1.2900 (Psychological level).

USD/CHF: The dollar declined against the Swiss franc on Tuesday, as traders cashed in on recent record highs, awaited a long-anticipated U.S.-China trade deal and began to digest the first Wall Street earnings of the new year. Besides the expected trade deal, investors are also looking to U.S. inflation data due at 1330 GMT, with consensus expectations for it to hold steady at 0.2% in December.Greenback fell 0.2% versus the Swiss franc to 0.9687. Immediate resistance can be seen at 0.9717 (5 DMA), an upside break can trigger rise towards 0.9763 (Jan 10th high).On the downside, immediate support is seen at 0.9714 (11 DMA), a break below could take the pair towards 0.9664 (Jan 20th low).

USD/JPY: The dollar strengthened against the Japanese yen on Tuesday, as the U.S. Treasury Department reversed its decision in August to designate China as a currency manipulator. The announcement came as Chinese Vice Premier Liu He arrived in Washington ahead of Wednesday’s signing with U.S. President Donald Trump of a preliminary trade agreement aimed at easing tensions between the two countries. The dollar rose as much as 0.25% to 110.22 yen JPY=, its highest since late May against the safe-haven Japanese currency. It last stood at 110.04 yen. Strong resistance can be seen at 109.92 (Daily high), an upside break can trigger rise towards 110.08 (Higher BB).On the downside, immediate support is seen at 109.30 (5 DMA), a break below could take the pair towards 108.93 (11 DMA). 

Equities Recap

European shares treaded water on Tuesday, as investors awaited the signing of an initial trade truce to end a prolonged U.S.-China tariff dispute, with attention also turning to the fourth-quarter corporate earnings season.

The pan-European STOXX 600 index fell 0.2% by 0812 GMT in its third straight day of declines.

Commodities Recap

Gold slipped to an over one-week low on Tuesday as strength in equities markets and hopes for a smooth signing of the U.S.-China Phase 1 trade deal tarnished bullion’s safe-haven appeal, while palladium rose to a record high.

Spot gold dipped 0.3% to $1,543.91 per ounce by 1043 GMT. Earlier, prices fell to their lowest since Jan. 3 at $1,535.63. U.S. gold futures dropped 0.4% to $1,544.60.

Oil prices slid towards $64 a barrel on Tuesday, extending four straight days of declines due to easing concerns of possible supply disruptions as a result of tensions in the Middle East.

Brent crude was down 11 cents, or 0.19%, at $64.08 per barrel by 0916 GMT. U.S. West Texas Intermediate crude futures were down 22 cents or 0.4% at $57.86 a barrel. The benchmarks lost about 5% and 6%, respectively, last week

Treasury Recap

U.S.: The U.S. Treasuries remained tad higher during Tuesday’s afternoon session ahead of the country’s consumer price inflation (CPI) for the month of December, scheduled to be released today by 13:30GMT and FOMC member Williams’ speech, also due today by 14:00GMT. The yield on the benchmark 10-year Treasury yield slipped 1 basis point to 1.839 percent, the super-long 30-year bond yield also edged tad 1 basis point down to 2.294 percent and the yield on the short-term 2-year traded 1/2 basis point down at 1.580 percent.

EUR: The German bunds gained during European trading session Tuesday amid silent trading hours that witnessed data of little economic significance ahead of eurozone’s industrial production and trade balance data for the month of November, scheduled to be released on January 15 by 10:00GMT. The German 10-year bond yield, which moves inversely to its price, slipped 1-1/2 basis points to -0.208 percent, the yield on 30-year note suffered 2 basis points to 0.347 percent while the yield on short-term 2-year traded flat at -0.588 percent.

AUS: The Australian bonds suffered during Asian session of the second trading day of the week Tuesday, tracking a similar movement in the U.S. Treasuries as investors placed bullish bets on hopes of a U.S.-China trade deal, scheduled to be signed on Wednesday. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped nearly 4 basis points to 1.252 percent, the yield on the long-term 30-year bond surged 3-1/2 basis points to 1.865 percent and the yield on short-term 2-year gained 1-1/2 basis points to 0.817 percent.    
 


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