• Europe roundup: Sterling eases as no-deal Brexit worries persist, greenback steadies ahead of Federal Open Market Committee meeting minutes, European shares rally - Wednesday, August 21st, 2019

    Source: FxWire Pro - Media Round Ups / 21 Aug 2019 12:59:41   Europe/London

    Market Roundup

    • German president: Reopening Brexit talks on backstop unlikely
       
    • German cabinet agrees to end reunification tax for most taxpayers
       
    • Majority of Britons say any Brexit deal should be put to referendum - poll
       
    • Germany's Scholz sees no sign Italy will trigger euro crisis
       
    • Spain trade deficit rises 0.9% to June year-on-year
       

    Economic Data Ahead

    • (0830 ET/1230 GMT) Statistics Canada is expected to report that the annual inflation rate eased to 1.7 percent in July from 2.0 percent in June. While the core consumer price index is likely to have increased 0.2 percent after falling 0.2 percent in the previous month.
       
    • (1000 ET/1400 GMT) National Association of Realtors is likely to report that U.S. existing home sales increased 2.5 percent to an annual rate of 539,000 million units in July.
       
    • (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending August 16.
       

    Key Events Ahead

    • (1400 ET/1800 GMT) The Federal Open Market Committee issues minutes of its latest policy meeting.

    FX Beat

    DXY: The dollar index rebounded from a near 1-week low hit earlier in the session, as traders waited for the Federal Reserve’s annual Jackson Hole symposium later this week and a Group of Seven summit this weekend. The greenback against a basket of currencies traded flat at 98.18, having touched a high of 98.45 on Tuesday, its highest since August 1.

    EUR/USD: The euro steadied near the 1.1100 handle, ahead of a crucial meeting of central bankers later this week, which is expected to shed more light on what additional steps policymakers may take to boost economic growth. The European currency traded flat at 1.1102, having touched a low of 1.1065 on Tuesday, its lowest since August 1. Immediate resistance is located at 1.1128 (38.2% retracement of 1.1230 and 1.1065), a break above targets 1.1147 (50.0% retracement). On the downside, support is seen at 1.1060 (July 31 Low), a break below could drag it below 1.1026 (August 1 Low).

    USD/JPY: The dollar rose, reversing most of its previous session losses, as investors awaited the minutes from the U.S. Federal Reserve’s last meeting, which is expected to shed more light on interest rate cuts. The major was trading 0.2 percent up at 106.44, having hit a low of 105.05 last week, its lowest since Jan 3. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. existing home sales and FOMC minutes. Immediate resistance is located at 107.01 (21-DMA), a break above targets 107.56 (August 2 High). On the downside, support is seen at 105.89 (August 8 Low), a break below could take it lower at 105.29 (Aug. 9 Low).

    GBP/USD: Sterling declined from a 1-1/2 week peak hit in the previous session as worries over a no-deal Brexit clouded investor appetite despite German Chancellor Angela Merkel suggesting that there might be room for negotiation. The major traded 0.3 percent down at 1.2129, having hit a high of 1.2179 on Tuesday, it’s highest since August 8. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2210 (38.2% retracement of 1.2522 and 1.2079), a break above could take it near 1.2331 (61.8% retracement). On the downside, support is seen at 1.2099 (10-DMA), a break below targets 1.2041 (August 13, Low). Against the euro, the pound was trading 0.4 percent down at 91.53 pence, having hit a high of 90.90 on Friday, it’s highest since July 31.

    USD/CHF: The Swiss franc eased, hovering towards a 2-week low hit earlier in the week, as investors await the central bank’s annual Jackson Hole seminar later this week with major focus on a scheduled speech by Fed Chair Jerome Powell. The major trades 0.2 percent up at 0.9794, having touched a high of 0.9821 on Monday, it’s highest since August 5. On the higher side, near-term resistance is around 0.9855 (61.8% retracement of 0.9975 and 0.9659) and any break above will take the pair to next level till 0.9980 (78.6% retracement). The near-term support is around 0.9755 (10-DMA), and any close below that level will drag it till 0.9705 (August 14 Low).

    Equities Recap

    European shares surged as hopes for more monetary and fiscal stimulus helped ease worries about the global recession, trade wars and political turmoil in Italy.

    The pan-European STOXX 600 index rose 1.1 percent at 375.31 points, while the FTSEurofirst 300 surged 1.1 percent to 1,477.40 points.

    Britain's FTSE 100 trades 1.1 percent up at 7,202.17 points, while mid-cap FTSE 250 rose 0.8 to 19,165.65 points.

    Germany's DAX rallied 1.1 percent at 11,778.85 points; France's CAC 40 trades 1.5 percent higher at 5,423.30 points.

    Commodities Recap

    Crude oil rose after industry data showed a larger-than-expected drop in U.S. crude inventories, but lingering worries about a possible global recession limited upside. International benchmark Brent crude was trading 1.5 percent higher at $60.93 per barrel by 1052 GMT, having hit a high of $61.00 earlier, its highest since August 13. U.S. West Texas Intermediate was trading 1.2 percent up at $56.77 a barrel, after rising as high as $56.86 earlier, its highest since August 13.

    Gold prices eased as investors turned cautious ahead of minutes from the U.S. Federal Reserve’s last meeting, which is expected to shed more light on interest rate cuts. Spot gold was trading 0.4 percent down at $1,501.21 per ounce by 1055 GMT, having touched a low of $1,492.74 on Tuesday, its lowest since August 13. U.S. gold futures slipped 0.4 percent to $1,509.70.

    Treasuries Recap

    The U.S. Treasuries suffered during the afternoon session ahead of the Federal Open Market Committee’s (FOMC) end-July monetary policy meeting minutes, scheduled to be released today by 18:00GMT. Also, Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium this week will add further direction to the debt market. The yield on the benchmark 10-year Treasury yield jumped 2-1/2 basis points to 1.584 percent, the super-long 30-year bond yields surged 2 basis points to 2.063 percent and the yield on the short-term 2-year traded 2-1/2 basis points higher at 1.539 percent.

    The German bunds slumped during European trading session ahead of the country’s manufacturing PMI for the month of August, scheduled to be released on August 22 by 07:30GMT and the European Central Bank’s (ECB) account of July monetary policy meeting, due on the same day later by 11:30GMT for further direction in the debt market. The German 10-year bond yields, which move inversely to its price, jumped 2 basis points to -0.670 percent, the yield on 30-year note also surged 2 basis points to -0.152 percent and the yield on short-term 2-year traded tad higher at -0.901 percent.

    The Japanese government bonds closed flat as investors keep a close eye on the country’s national consumer price inflation (CPI) for the month of July, scheduled to be released on August 22 by 23:30GMT and the August manufacturing PMI, due early on the same day for further direction in the debt market. At close, the yield on the benchmark 10-year JGB note, which moves inversely to its price, slumped 9 basis points to -0.238 percent, the yield on the long-term 30-year suffered 1-1/2 basis points to 0.181 percent and the yield on short-term 2-year plunged 16 basis points to -0.299 percent.

    The Australian government bonds jumped during Asian session following investors’ improved appetite after global recession fears eased, tracking hopes of stimuli from major economies like China and Germany to support the ailing economies. However, the downside in bond prices was capped by the Reserve Bank of Australia’s (RBA) hint at further monetary policy easing in its August meeting minutes, released early today. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 2-1/2 basis points to 0.930 percent, the yield on the long-term 30-year bond slipped 1/2 basis point to 1.545 percent while the yield on short-term 2-year traded 1-1/2 basis points lower at 0.734 percent.

Share on,