• Europe roundup: Sterling off highs after UK inflation, Dollar index rebounds from 4-month trough against Yen as investor sentiment improves, European shares rally - Tuesday, January 16th, 2018

    Source: FxWire Pro - Media Round Ups / 16 Jan 2018 07:21:10   Eastern Standard Time

    Market Roundup

    • United Kingdom Dec PPI core output yy nsa increase to 2.5 % (forecast 2.3 %) vs previous 2.2 %

    • United Kingdom Dec PPI core output mm nsa increase to 0.3 % (forecast 0.2 %) vs previous 0.2 %
       
    • United Kingdom Dec PPI output prices yy nsa increase to 3.3 % (forecast 2.9 %) vs previous 3.1 % (revised from 3 %)
       
    • United Kingdom Dec PPI input prices yy nsa decrease to 4.9 % (forecast 5.4 %) vs previous 7.3 %
       
    • United Kingdom Dec PPI output prices mm nsa stays flat at 0.4 % (forecast 0.3 %) vs previous 0.4 % (revised from 0.3 %)
       
    • United Kingdom Dec PPI input prices mm nsa decrease to 0.1 % (forecast 0.4 %) vs previous 1.6 % (revised from 1.8 %)
       
    • United Kingdom Dec CPI yy decrease to 3 % (forecast 3 %) vs previous 3.1 %
       
    • United Kingdom Dec core CPI mm stays flat at 0.3 % (forecast 0.4 %) vs previous 0.3 %
       
    • United Kingdom Dec CPI mm increase to 0.4 % (forecast 0.4 %) vs previous 0.3 %
       
    • United Kingdom Dec core CPI yy decrease to 2.5 % (forecast 2.6 %) vs previous 2.7 %
       
    • Italy Nov global trade balance decrease to 4.83 bln eu vs previous 4.988 bln eu (revised from 4.953 bln eu)
       
    • Italy Nov trade balance eu decrease to 0.236 bln eu vs previous 0.701 bln eu (revised from 0.666 bln eu)
       

    Economic Data Ahead

    • (0830 ET/1330 GMT) The Federal Reserve Bank of New York is expected to report that New York State manufacturing activity index grew to 18.2 in January after rising to 18 in the month before.
       
    • (1830 ET/2330 GMT) The Faculty of Economics and Commerce Melbourne Institute will release Australia's Westpac consumer confidence for the month of January. The index rose 3.6 percent in January.
       
    • (1850 ET/2350 GMT) Japan's machinery orders are likely to have decreased 1.4 percent for the month of November after posting a rise of 5.0 percent in October.
       

    Key Events Ahead

    • (1200 ET/1700 GMT) Swiss National Bank's Thomas Jordan speaks at Zurich University of Education, Zurich.

    FX Beat

    DXY: The dollar index rebounded after falling to a 3-year low in the session before as investors awaited speeches from the FOMC members Evans, Kaplan, and Mester for fresh clues on the central bank's monetary policy outlook. The greenback against a basket of currencies traded 0.4 percent up at 90.77, having touched a low of 90.28 on Monday, its lowest since January 2015. FxWirePro's Hourly Dollar Strength Index stood at -74.61 (Slightly Bearish) by 1000 GMT.

    EUR/USD: The euro slightly eased after rallying to a 3-year high in the previous session on the back of comments from ECB rate-setter Ardo Hansson, stating that the ECB could end its 2.55 trillion euro bond-buying scheme in one step after September if the economy and inflation grew as expected. The European currency traded 0.2 percent down at 1.2228, having touched a high of 1.2296 on Monday, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at 103.59 (Highly Bullish) by 1000 GMT. Immediate resistance is located at 1.2300, a break above targets 1.2340. On the downside, support is seen at 1.2216 (78.6% retracement of 1.1916 and 1.2269), a break below could drag it lower 1.2153 (61.8% retracement).

    USD/JPY: The dollar bounced back from a 4-month low touched in the prior session, as a rebound in the greenback against a basket of currencies and improving market sentiment weakened the bid tone around the Japanese yen. The major was trading 0.2 percent up at 110.74, having hit a low of 110.32 on Monday, its lowest since Sept 15. FxWirePro's Hourly Yen Strength Index stood at -1.74 (Neutral) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of New York Empire State Manufacturing Index for further momentum. Immediate resistance is located at 111.05 (23.6% retracement of 110.32 and 113.38), a break above targets 111.49 (38.2% retracement). On the downside, support is seen at 110.32 (Previous Session Low), a break below could take it near 110.00.

    GBP/USD: Sterling slumped from a 1-1/2 year peak hit in the prior session after data showed UK inflation eased off its post-Brexit-vote high in December. The economy's consumer prices rose 3 percent in December year-on-year, in line with expectations, but down from 3.1 percent in November, recording the first drop in inflation since June. The major traded 0.3 percent down at 1.3754, having hit a high of 1.3819 on Monday, it’s highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at 51.94 (Bullish) by 1000 GMT. Immediate resistance is located at 1.3830, a break above could take it near 1.3870. On the downside, support is seen at 1.3744 (78.6% retracement of 1.3458 and 1.3819), a break below targets 1.3683 (61.8% retracement). Against the euro, the pound was trading 0.1 percent down at 88.80 pence, having hit a low of 89.29 pence on Friday, it’s lowest since Nov. 28.

    USD/CHF: The Swiss franc declined after rising to a near 4-month peak in the previous session, as the greenback against a basket of currencies rebounded from its lowest since January 2015. The major trades 0.3 percent up at 0.9659, having touched a low of 0.9603 on Monday, it’s lowest since Sept. 20. FxWirePro's Hourly Swiss Franc Strength Index stood at -0.32 (Neutral) by 1000 GMT.  On the higher side, near-term resistance is around 0.9695 (61.8% retracement of 0.9845 and 0.9603) and any break above will take the pair to next level till 0.9734 (5-DMA). The near-term support is around 0.9600 and any close below that level will drag it to next level till 0.9570.

    AUD/USD: The Australian dollar consolidated below the 0.8000 handle as weaker commodity prices and a modest U.S. dollar recovery attempt undermined the bid tone around the major.  The Aussie trades 0.3 percent up at 0.7943, having hit a high of 0.7978 on Monday; it’s highest since Sept. 22. FxWirePro's Hourly Aussie Strength Index stood at 0.06 (Neutral) by 1000 GMT. Immediate support is seen at 0.7915 (61.8% retracement of 0.7807 and 0.7978), a break below targets 0.7895 (50.0% retracement). On the upside, resistance is located at 0.7990, a break above could take it near 0.8040.

    Equities Recap

    European shares advanced, boosted by corporate trading updates, while the euro eased from multi-year highs but was still up 2 percent since the start of the year, supported by talk of a quicker end to European Central Bank stimulus.

    The pan-European STOXX 600 index rallied 0.3 percent to 399.15 points, while the FTSEurofirst 300 index edged down 0.3 percent to 1,570.88 points.

    Britain's FTSE 100 trades 0.2 percent lower at 7,787.05 points, while mid-cap FTSE 250 rose 0.2 percent to 20,870.69 points.

    Germany's DAX rose 0.6 percent at 13,271.20 points; France's CAC 40 trades 0.3 percent up at 5,525.72 points.

    Commodities Recap

    Crude oil prices eased but remained close to multi-year highs on the back of production curbs in OPEC nations and Russia, as well as strong demand. International benchmark Brent crude was trading 0.5 percent up at $69.86 per barrel by 0954 GMT, having hit a high of $70.33 on Monday, its highest since Dec. 2014. U.S. West Texas Intermediate was trading 0.6 percent down at $64.39 a barrel, after rising as high as $64.86 on Monday, its highest since Dec. 2014.

    Gold prices edged lower after rising to a 4-month high in the previous session, as the dollar rebounded from three-year lows against a basket of currencies. Spot gold was 0.4 percent down at $1,334.23 an ounce by 0956 GMT, after touching its strongest since Sept. 11 at $1,344.47 on Monday. U.S. gold futures rose 0.4 percent to $1,340.80 an ounce.

    Treasuries Recap

    The U.S. Treasuries jumped after regional markets returned to trading, following a long weekend and are now looking forward to a host of speeches from the FOMC members Evans, Kaplan, and Mester scheduled to be held on January 17. The yield on the benchmark 10-year Treasuries slumped nearly 2-1/2 basis points to 2.53 percent, the super-long 30-year bond yields also plunged 2-1/2 basis points to 2.82 percent and the yield on the short-term 2-year traded nearly flat at 1.99 percent.

    The UK gilts surged after the country’s consumer price-led inflation index for the month of December dropped, albeit meeting market expectations for the same. The yield on the benchmark 10-year gilts, slumped nearly 2-1/2 basis points to 1.30 percent, the super-long 30-year bond yields slid 1-1/2 basis points to 1.80 percent and the yield on the short-term 2-year fell 1/2 basis point to 0.58 percent.

    The German bunds gained after the country’s consumer price inflation index (CPI) for the month of December met market expectations. The German 10-year bond yields, which move inversely to its price, fell nearly 1-1/2 basis points to 0.57 percent, the yield on 30-year note also slid 1-1/2 basis points to 1.32 percent and the yield on short-term 2-year traded tad 1/2 basis point lower at -0.57 percent.

    The New Zealand government bonds closed narrowly mixed, following a disparate set of economic data released overnight. Also, investors’ are awaiting the GlobalDairyTrade (GDT) price auction to be held today for further direction in the debt market. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 2 basis points to 2.89 percent, the yield on 20-year climbed 2-1/2 basis points to 3.37 percent and the yield on short-term 2-year also ended 2-1/2 basis points higher at 2.00 percent.

    The Japanese government bonds traded nearly flat as investors remained sidelined in any major trading activity amid a silent session that witnessed no data of major economic importance. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded flat at 0.073 percent, the yield on the long-term new 40-year note dipped 1/2 basis point to 0.992 percent and the yield on short-term 2-year remained steady at -0.133 percent.

    The Australian government bonds continued to hover near 4-month high as investors awaited the December employment report, which would allow the Reserve Bank of Australia (RBA) to decide on future interest rate path. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1-1/2 basis points to 2.7662 percent, the yield on the long-term 30-year note dipped 1 basis point to 3.455 percent and the yield on short-term 2-year up 1 basis point to 2.074 percent.