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Europe Roundup: Sterling consolidates amid Brexit deal tensions, greenback rallies ahead of Fed Chair Powell's speech, European shares plunge - Thursday, December 6th,2018

Posted at 06 December 2018 / Categories Market Roundups

Market Roundup

• United States Nov 2018 total vehicle sales decrease to 17.49 no. of (forecast 17.2 no. of) vs previous 17.57 no. of
   
• Germany Oct 2018 industrial orders mm stays flat at 0.3 % (forecast -0.4 %) vs previous 0.3 %
   
• Brexit: EU's Barnier says UK Brexit vote will set future of country
   
• Brexit: EU'S Barnier says it is key to ratify Brexit treaty
   
• British Brexit Minister Barclay says we will be ready for a no deal Brexit by March next year, but significant work will be required
   
• Brexit: UK PM may says looking at extent to which parliament can have role in northern Irish backstop use
   
• Brexit: UK PM may says should not be another referendum on Brexit
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Economic Data Ahead

• (0815 ET/1315 GMT) Payrolls processor ADP releases U.S. employment report for the month of November. The report is expected to show that 195,000 jobs were added as compared with 225,000 jobs in October.
   
• (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 9,000 to a seasonally adjusted 225,000 for the week ended Nov. 30, while continuing claims for the week ended Nov. 23 declined to 1.70 million from a previous reading of 1.710.million.
   
• (0830 ET/1330 GMT) The United States releases trade balance figures for the month of November The economy's trade deficit is expected to have widened to $55.0 billion from 54.0 billion in October.
   
• (0830 ET/1330 GMT) The U.S. Labor Department will release labor costs report for the third quarter. The indicator is expected to rose 1.1 percent after posting a gain of 1.2 percent in the previous quarter.  
   
• (0830 ET/1330 GMT) The U.S. Labor Department is likely to report that non-farm productivity edged higher 2.3 percent in the third quarter from 2.2 percent in the second quarter.
   
• (0830 ET/1330 GMT) The Statistics Canada is likely to report that international trade deficit widened to C$0.70 billion in October from C$0.42 billion in September.
   
• (0945 ET/1445 GMT) Financial firm Markit releases final U.S. composite PMI for the month of November. The index printed a final reading of 54.4 in the previous month.
   
• (0945 ET/1445 GMT) Markit Economics reports final U.S. services PMI for the month of November. The index posted a final reading of 54.4 in October.
   
• (1000 ET/1500 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. non-manufacturing Purchasing Managers' index slipped to a reading of 59.2 in November from 60.3 in October.
   
• (1000 ET/1500 GMT) The United States is likely to report that factory orders decreased 0.2 percent in October, after posting a rise of 0.7 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 64.6 in the prior month.
   
• (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending November 28.
   
• (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending November 30.
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Key Events Ahead

• (0850 ET/1350 GMT) Bank of Canada Governor Stephen Poloz will deliver a speech about the central bank's interest rate decision on Dec. 5. in Toronto
   
• (1200 ET/1700 GMT) Fed issues quarterly Flow of Funds Assets in Washington
   
• (1215 ET/1715 GMT) Federal Reserve Bank of Atlanta President Raphael Bostic speaks on the national outlook before a Georgia Economic Outlook event in Atlanta
   
• (1830 ET/2330 GMT) Federal Reserve Bank of New York President John Williams participates in a moderated discussion organized by the London School of Economics and Political Science, in New York.
   
• (1845 ET/2345 GMT) Federal Reserve Chairman Jerome Powell gives brief welcome remarks before the Housing Assistance Council Rural Housing Conference in Washington
   

FX Beat

DXY: The dollar index rallied to a 6-day peak as investors awaited the U.S ADP non-farm employment change, FOMC members Bostic, William; and Fed Chair Powell's speech for further insight on the strength of the economy. The greenback against a basket of currencies trades 0.1 percent up at 97.10, having touched a low of 96.38 on Tuesday, its lowest since Nov 22. FxWirePro's Hourly Dollar Strength Index stood at 40.18 (Neutral) by 1000 GMT.

EUR/USD: The euro eased as the greenback surged on expectations the Federal Reserve policymakers will raise interest rates again at their Dec 18-19 meeting. The European currency traded 0.1 percent down at 1.1330, having touched a high of 1.1418 on Tuesday, its highest since Nov. 23. FxWirePro's Hourly Euro Strength Index stood at -52.13 (Bearish) by 1000 GMT. Immediate resistance is located at 1.1379 (December 3 High), a break above targets 1.1420 (November 16 High). On the downside, support is seen at 1.1305 (November 30 Low), a break below could drag it till 1.1263 (November 26 Low).

USD/JPY: The dollar plunged, hovering towards a 2-week low touched earlier in the week, as the arrest in Canada of a top executive of Chinese tech giant Huawei and concern about a possible U.S. recession stoked fears among the investors. The major was trading 0.4 percent down at 112.78, having hit a low of 112.57 on Tuesday, its lowest since November 20. FxWirePro's Hourly Yen Strength Index stood at 170.01 (Highly Bullish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. Challenger Job cuts, ADP employment Change, trade balance, unemployment benefit claims, unit labour cost, services PMI form both Makit and ISM; and speeches from Fed policymakers. Immediate resistance is located at 113.50 (November 6 High), a break above targets 114.03 (November 28 High). On the downside, support is seen at 112.42 (November 19 Low), a break below could take it lower 111.82 (October 25 Low).

GBP/USD: Sterling consolidated within a narrow range, as British Prime Minister Theresa May faces deep opposition in parliament ahead of a December 11 vote on her withdrawal agreement. The major traded 0.1 percent down at 1.2724, having hit a low of 1.2658 on Tuesday; it’s lowest since June 2017. FxWirePro's Hourly Sterling Strength Index stood at 29.81 (Neutral) 1000 GMT. Immediate resistance is located at 1.2809 (November 30 High), a break above could take it near 1.2884 (November 19 High). On the downside, support is seen at 1.2661 (August 15 Low), a break below targets 1.2600. Against the euro, the pound was trading 0.1 percent up at 89.01 pence, having hit a low of 89.44 on Tuesday, it’s lowest since Nov. 19.

USD/CHF: The Swiss franc eased, extending previous session losses, as Washington and Beijing are set to begin negotiations aimed at de-escalating their bruising trade war. The major trades 0.05 percent up at 0.9980, having touched a high of 1.0008 on Wednesday; it’s highest since Nov. 16. FxWirePro's Hourly Swiss Franc Strength Index stood at 122.82 (Highly Bullish) by 1000 GMT. On the higher side, near-term resistance is around 1.0026 (Oct. 26 High) and any break above will take the pair to next level till 1.0050 (Nov. 7 High). The near-term support is around 0.9908 (November 20 Low), and any close below that level will drag it till 0.9881 (October 12 Low).

Equities Recap

European shares tumbled, weighed down by the arrest of a top executive at Huawei and concern over an economic slowdown in the United States.

The pan-European STOXX 600 index slumped 2.3 percent at 346.21 points, while the FTSEurofirst 300 index plunged 2.2 percent to 1,366.47 points.

Britain's FTSE 100 trades 2.4 percent down at 6,753.86 points, while mid-cap FTSE 250 fell 2.6 to 17,803.03 points.

Germany's DAX declined 2.3 percent at 10,940.72 points; France's CAC 40 trades 2.4 percent lower at 4,826.15 points.

Commodities Recap

Crude oil prices eased to a near 1-week low as traders eyed an OPEC meeting expected to result in a supply cut aimed at draining a glut. International benchmark Brent crude was trading 4.7 percent down at $58.66 per barrel by 1037 GMT, having hit a high of $63.56 on Tuesday, its highest since November 22. U.S. West Texas Intermediate was trading 4.6 percent down at $50.48 a barrel, after rising as high as $54.54 on Tuesday, its highest since the November 22.

Gold prices declined, extending previous session losses as investors booked profits, while the dollar strengthened. Spot gold fell 0.1 percent to $1,236.24 per ounce at 1040 GMT, having touched a high of $1,241.82 on Tuesday, its highest level since Oct. 26. U.S. gold futures were 0.1 percent lower at $1,240.8 per ounce.

Treasuries Recap

The U.S. Treasuries surged during late afternoon session ahead of the country’s ADP non-farm employment change for the month of November, scheduled to be released today by 13:15GMT. The yield on the benchmark 10-year Treasuries slumped nearly 3 basis points to 2.896 percent, the super-long 30-year bond yields fell nearly 1-1/2 basis points to 3.165 percent and the yield on the short-term 2-year plunged 5 basis points to 2.760 percent.

The German bunds climbed during European session amid silent trading hours as investors wait to watch the Eurozone’s gross domestic product (GDP) for the third quarter of this year, scheduled to be released on December 7 by 10:00GMT for further direction in the debt market. The German 10-year bond yields, which move inversely to its price, fell nearly 2 basis points to 0.258 percent, the yield on 30-year note also suffered 2 basis points to 0.908 percent and the yield on short-term 2-year traded a tad lower at -0.609 percent.

The Japanese government bonds remained mixed ahead of the country’s household spending data for the month of October, scheduled to be released today by 23:30GMT and the super-long 30-year auction, due on December 7 will add detailed direction to the debt market. The yield on the benchmark 10-year JGB note, which moves inversely to its price, jumped 5 basis points to 0.050 percent, the yield on the long-term 30-year note hovered around 0.789 percent while the yield on short-term 2-year plunged 15 basis points to -0.149 percent

The Australian government bonds jumped during Asian session after the country’s trade balance data for the month of October came in lower than market expectations, also down from the previous reading in September. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 2-1/2 basis points to 2.474 percent, the yield on the long-term 30-year bond also slumped 2-1/2 basis points to 2.997 percent and the yield on short-term 2-year traded 4 basis points down at 1.927 percent.