• Europe roundup: Sterling rallies above 1.3100 ahead of next week's election; Swiss Franc, Yen ease on U.S.-China trade optimism, European shares rally - Thursday, December 5th, 2019

    Source: FxWire Pro - Media Round Ups / 08 Dec 2019 10:13:38   America/New_York

    Market Roundup

    • Sterling hits 2-1/2 year highs vs euro
       
    • Dollar near 1-month low on weak U.S. data
       
    • German industrial orders fall unexpectedly in October
       
    • Eurozone growth curbed by trade, retail sales
       

    Economic Data Ahead

    • (0830 ET/1330 GMT) The United States releases trade balance figures for the month of October. The economy's trade deficit is expected to have narrowed to $48.7 billion from 52.5 billion in September.
       
    • (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 2,000 to a seasonally adjusted 215,000 for the week ended Nov. 29, while continuing claims for the week ended Nov. 22 is expected to rise to 1.65 million from the previous week's reading of 1.64 million.
       
    • (0830 ET/1330 GMT) Statistics Canada is likely to report that international trade deficit expands to C$1.37 billion in October from C$0.98 billion in September.
       
    • (1000 ET/1500 GMT) The United States is likely to report that factory orders increased 0.3 percent in October after posting a fall of 0.6 percent in the prior month.
       
    • (1000 ET/1500 GMT) The Richard Ivey School of Business releases Canada's seasonally adjusted Ivey Purchasing Managers Index for the month of November. The index posted a reading of 48.2 in the prior month.
       
    • (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending November 29.
       

    Key Events Ahead

    • (0800 ET/1300 GMT) Bank of Canada Deputy Governor Timothy Lane's speech
       
    • (1000 ET/1500 GMT) Vice-Chair for supervision of the Federal Reserve Board of Governors Randal Keith Quarles' speech

    FX Beat

    DXY: The dollar index plunged, extending losses for the sixth straight session, amid growing concerns whether the U.S. Federal Reserve could turn dovish if the weak data flow continues. The greenback against a basket of currencies traded 0.1 percent down at 97.50, having touched a low of 97.43 on Wednesday, its lowest since November 4.

    EUR/USD: The euro surged after data showed the eurozone economy grew at a modest pace in the third quarter. The economy's gross domestic product was up 0.2 percent in the July-September period, matching the flash estimate released in October and unchanged from the second quarter. However, the upside in the major appears limited as separate data showing German industrial orders fell unexpectedly in October on weak domestic and foreign demand dented euro bull's sentiment. The European currency traded 0.1 percent up at 1.1091, having touched a high of 1.1116 on Wednesday, its highest since November 7. Immediate resistance is located at 1.1097, a break above targets 1.1123. On the downside, support is seen at 1.1052 (5-DMA), a break below could drag it below 1.1037 (10-DMA).

    USD/JPY: The dollar surged, extending the previous session after Bloomberg reported that U.S. and China were closer to agreeing on the amount of tariffs that would be rolled back in a phase one trade deal. The major was trading 0.1 percent up at 108.80, having hit a low of 108.42 on Wednesday, its lowest since Nov 21. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims, trade balance, factory orders and Fed Quarles speech. Immediate resistance is located at 109.09 (5-DMA), a break above targets 109.29. On the downside, support is seen at 108.65, a break below could take it near at 108.48.

    GBP/USD: Sterling rallied to a 7-month peak on growing expectations that next week's election will give the Conservative Party the parliamentary majority it needs to deliver Brexit. The major traded 0.2 percent up at 1.3135, having hit a high of 1.3148 earlier, it’s highest since May 6. Investors’ attention will remain on the development surrounding the general elections, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3176, a break above could take it near 1.3200. On the downside, support is seen at 1.3080, a break below targets 1.3039. Against the euro, the pound was trading flat at 84.46 pence, having hit a high of 84.30 earlier, it’s highest since May 2017.

    USD/CHF: The Swiss franc eased, extending previous session losses, as investor risk appetite improved following Trump’s positive comments on trade. The major trades up at 0.9885, having touched a low of 0.9855 on Wednesday, it’s lowest since November 4. On the higher side, near-term resistance is around 0.9914 and any break above will take the pair to the next level till 0.9931 (21-DMA). The near-term support is around 0.9850, and any close below that level will drag it till 0.9836.

    Equities Recap

    European shares rebounded from a 4-day low, boosted by a report that Beijing and Washington are moving closer to a trade deal.

    The pan-European STOXX 600 index gained 0.5 percent at 405.26 points, while the FTSEurofirst 300 rallied 0.5 percent to 1,583.32 points.

    Britain's FTSE 100 trades 0.1 percent down at 7,180.59 points, while mid-cap FTSE 250 gained 0.3 to 20,715.83 points.

    Germany's DAX rose 0.2 percent at 13,170.87 points; France's CAC 40 trades 0.7 percent higher at 5,843.08 points.

    Commodities Recap

    Crude oil prices surged ahead of a key OPEC meeting where members are expected to weigh deeper output cuts in an effort to support prices and prevent a glut next year. International benchmark Brent crude was trading 0.5 percent up at $63.33 per barrel by 1114 GMT, having hit a low of $60.29 on Tuesday, its lowest since November 20. U.S. West Texas Intermediate was trading 0.2 percent up at $58.45 a barrel, after rising as high as $58.64 on Thursday, its highest since November 27.

    Gold prices consolidated within narrow ranges as conflicting signals from Washington and Beijing prolonged the uncertainty about a trade deal. Spot gold was trading flat at $1,474.72 per ounce by 1116 GMT, having touched a high of $1483.97 on Wednesday, its highest since Nov. 7. U.S. gold futures were up 0.2 percent at $1,483.00 per ounce.

    Treasuries Recap

    The Euro zone government bond yields were little changed as investors awaited the next signal from China-U.S. trade negotiations. German 10-year bond yields were unchanged in early trading, at -0.318 percent, while other core government bond yields were also little moved. French and Spanish yields underperformed marginally at the open. Italian bonds were mixed, with the 10-year yield rising 1 basis point to 1.393 percent and shorter-dated yields fell.

    The long-dated Japanese government bond yields declined, but a rise in shorter yields on improving risk sentiment helped flatten the yield curve. The 30-year JGB yield fell 1 basis point to 0.420 percent, while the 40-year JGB yield fell 1.5 basis points to 0.445 percent. The benchmark 10-year JGB futures price was down 0.05 point at 152.68 by late trading. The 10-year cash JGB yield was up 0.5 basis point at minus 0.035 percent. The five-year yield rose 1 basis point to minus 0.140 percent and the two-year JGB yield edged up 1 basis point to minus 0.150 percent, matching a seven-month high touched on Tuesday.

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