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Europe Roundup: Sterling eases amid clouded Brexit vote outlook, euro slumps as investor sentiment deteriorates, markets eye FOMC meeting minutes - Thursday, November 29th, 2018

Posted at 29 November 2018 / Categories Market Roundups

Market Roundup

• Eurozone Nov 2018 selling price expectations increase to 11.3 balance vs previous 9.7 balance (revised from 9.5 balance)
   
• Eurozone Nov 2018 cons inflation expectations decrease to 21.1 balance vs previous 21.6 balance
   
• Eurozone Nov 2018 services sentiment stays flat at 13.3 balance (forecast 13.1 balance) vs previous 13.3 balance (revised from 13.6 balance)
   
• Eurozone Nov 2018 industrial sentiment increase to 3.4 balance (forecast 2.5 balance) vs previous 3 balance
   
• Eurozone Nov 2018 economic sentiment decrease to 109.5 (forecast 109 ) vs previous 109.7 (revised from 109.8 )
   
• Eurozone Nov 2018 business climate increase to 1.09 (forecast 0.96 ) vs previous 1.01
   
• Eurozone Nov 2018 consumer confidence Final stays flat at -3.9 balance (forecast -3.9 balance) vs previous -3.9 balance
   
• United Kingdom Oct 2018 broad money increase to 2397317 gbp vs previous 2381270 gbp (revised from 2381107 GBP)
   
• United Kingdom Oct 2018 m4 money supply increase to 0.7 % vs previous -0.3 %
   
• United Kingdom Oct 2018 mortgage approvals increase to 67.086 no. Of (forecast 64.55 no. Of) vs previous 65.726 no. of (revised from 65.269 no. of)
   
• United Kingdom Oct 2018 mortgage lending increase to 4.121 GBP (forecast 3.501 GBP) vs previous 4.015 GBP (revised from 3.892 GBP)
   
• United Kingdom Oct 2018 BOE consumer credit increase to 0.894 GBP (forecast 1 GBP) vs previous 0.852 GBP (revised from 0.785 GBP)
   
• Germany Nov 2018 unemployment rate sa decrease to 5 % (forecast 5.1 %) vs previous 5.1 %
   
• Germany Nov 2018 unemployment total sa decrease to 2.276 person vs previous 2.292 person
   
• Germany Nov 2018 unemployment total nsa decrease to 2.186 person vs previous 2.204 person
  
   

Economic Data Ahead

• (0830 ET/1330 GMT)  The U.S. Commerce Department releases personal income figures for October, which is expected to rise 0.4 percent, compared to 0.2 percent in September.
   
• (0830 ET/1330 GMT) The U.S. Commerce Department releases the personal consumption expenditures (PCE) price index for the month of October. The index rose at an annualized rate of 2.0 percent in the prior month while core PCE is likely to have increased 0.2 percent after staying unchanged in the previous month.
   
• (0830 ET/1330 GMT) The U.S. Personal spending is likely to rise 0.4 percent in the month of October, after a similar gain in the previous month.
   
• (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 2,000 to a seasonally adjusted 220,000 for the week ended Nov. 23, while continuing claims for the week ended Nov. 16 is expected to decline to 1.664 million from a previous reading of 1.668 million.
   
• (0830 ET/1330 GMT) The Statistics Canada is likely to report that the current account deficit narrowed to C$11.50 billion in the third quarter, compared with a deficit of C$15.88 billion in the previous quarter.
   
• (1000 ET/1500 GMT) The National Association of Realtors is likely to report that U.S. pending home sales increased 0.5 percent in October.
   
• (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending November 23.
   

Key Events Ahead

• (0815 ET/1315 GMT) ECB member of the supervisory board Ignazio Angeloni participates in Panel Session III at The Italian Banking Conference 2018 in Milan
   
• (0830 ET/1330 GMT) Treasury Office of Financial Research and the Cleveland Fed co-sponsor two-day Financial Stability Conference, in Washington
   
• (0830 ET/1330 GMT) Federal Reserve Chairman Jerome Powell greets student teams at the Federal Reserve Board's 15th Annual National College Fed Challenge Finals in Washington.
   
• (1200 ET/1700 GMT) ECB policymaker Francois Villeroy de Galhau speaks on the economic outlook for the eurozone in Rome
   
• (1400 ET/1900 GMT) U.S. Federal Reserve's Federal Open Market Committee will release the minutes from its November 7-8 policy meeting in Washington
   
• (1430 ET/1930 GMT) Federal Reserve Bank of Cleveland President Loretta Mester, Federal Reserve Bank of Chicago President Charles Evans, Federal Reserve Bank of Philadelphia President Patrick Harker, Federal Reserve Bank of Minneapolis President Neel Kashkari, Federal Reserve Bank of Boston President Eric Rosengren and Federal Reserve Bank of Dallas President Robert Kaplan will participate in Collaboration for Inclusive Economic Development forum hosted by the Living Cities Collaborative.
   

FX Beat

DXY: The dollar index rebounded after falling to a near 1-week low earlier in the session, as investors’ awaited FOMC’s November policy meeting minutes that could reaffirm market expectations for a rate hike in December. The greenback against a basket of currencies trades 0.2 percent up at 96.97, having touched a high of 97.54 on Wednesday, its highest since Nov 13. FxWirePro's Hourly Dollar Strength Index stood at 25.15 (Neutral) by 1000 GMT.

EUR/USD: The euro trimmed gains after rising to a near 1-week peak earlier in the day, as data showed Eurozone economic sentiment continued to deteriorate in November, but less than expected, supported by a rise in optimism in the industry. The European currency traded flat at 1.1365, having touched a low of 1.1267 on Wednesday, its lowest since Nov. 14. FxWirePro's Hourly Euro Strength Index stood at 23.13 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1420 (November 16 High), a break above targets 1.1472 (November 20 High). On the downside, support is seen at 1.1325 (November 14 Low), a break below could drag it till 1.1263 (November 26 Low).

USD/JPY: The dollar slumped after U.S. Trade Representative Robert Lighthizer stated that he was examining all available tools to raise U.S. tariffs on Chinese vehicles to 40 percent duties that China is now charging on U.S.-produced vehicles. The major was trading 0.3 percent down at 113.32, having hit a high of 114.03 on Wednesday, its highest since November 13. FxWirePro's Hourly Yen Strength Index stood at 36.62 (Neutral) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. personal consumption expenditures, unemployment benefit claims, pending home sales and FOMC latest monetary policy minutes. Immediate resistance is located at 114.14 (November 13 High), a break above targets 114.60. On the downside, support is seen at 113.09 (November 15 Low), a break below could take it lower 112.64 (November 16 Low).

GBP/USD: Sterling eased below the 1.2800 handle as Prime Minister Theresa May struggles to gain support from the UK parliament for the agreement she sealed with the European Union leaders on Sunday. Moreover, Bank of England's warning of risks to the currency, if Britain leaves the EU in a disorderedly manner, continued to weigh on British pound bulls' sentiments. The major traded 0.4 percent down at 1.2769, having hit a low of 1.2725 on Tuesday; it’s lowest since November 15. FxWirePro's Hourly Sterling Strength Index stood at -91.19 (Slightly Bearish) 1000 GMT. Immediate resistance is located at 1.2884 (November 19 High), a break above could take it near 1.2926 (November 22 High). On the downside, support is seen at 1.2723 (November 22 Low), a break below targets 1.2695 (October 30 Low). Against the euro, the pound was trading 0.4 percent down at 88.93 pence, having hit a low of 89.12 earlier, it’s lowest since Nov. 22.

USD/CHF: The Swiss franc retreated from a 9-day peak after data showed Switzerland's gross domestic product seasonally adjusted eased 0.2 percent, below estimates of 0.4 percent gain and a previous reading of +0.7 percent. The major trades 0.3 percent up at 0.9961, having touched a high of 1.0005 on Wednesday; it’s highest since Nov. 19. FxWirePro's Hourly Swiss Franc Strength Index stood at 17.23 (Neutral) 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 rose, following gains in all major bourses and most sectors, while sterling eased on renewed concerns about the UK parliament's vote on Brexit.

The pan-European STOXX 600 index surged 0.5 percent at 359.15 points, while the FTSEurofirst 300 index rallied 0.4 percent to 1,412.88 points.

Britain's FTSE 100 trades 0.6 percent up at 7,045.75 points, while mid-cap FTSE 250 surged 0.5 percent to 18,726.96 points.

Germany's DAX rose 0.5 percent at 11,358.40 points; France's CAC 40 trades 0.8 percent higher at 5,020.68 points.

Commodities Recap

Crude oil prices declined, as U.S. crude inventories hit their highest in a year, however, optimism that trade talks at the upcoming G20 meeting could help the global economy limited downside. International benchmark Brent crude was trading 1.3 percent up at $57.90 per barrel by 1007 GMT, having hit a low of $57.53 earlier, its lowest since October 2017. U.S. West Texas Intermediate was trading 1.1 percent down at $49.73 a barrel, after falling as low as $49.44, its lowest since the October 2017.

Gold prices surged, extending previous session gains, as dovish comments from U.S. Federal Reserve Chair Jerome Powell calmed investor concerns over the pace of rate hikes. Spot gold was 0.4 percent up at $1,226.09 per ounce at 1010 GMT,  having eased to a low of $1,211.12 on Wednesday, its lowest level since Nov. 15. U.S. gold futures were up 0.1 percent at $1,225.1 per ounce.

Treasuries Recap

Italian government bond yields dipped, with the 4-year bond yield down 4 bps to 2.36 percent and the closely-watched spread over Germany was at 294 bps.

The Japanese government bond prices traded higher across the board, tracking gains in U.S. Treasuries, the 10-year JGB futures gained 0.20 point to 151.21, its highest level since September 2017.The benchmark 10-year cash JGB yield fell 1.5 point to a four-month low of 0.080 percent. The super-long sector followed suit, with the 20-year, the 30-year and the 40-year yields falling between one and two basis points each to 0.590 percent, 0.810 percent and 0.965 percent, respectively.

The Australian government bonds remained tad higher during Asian session as investors’ risk appetite showed downward signs, tracking a similar movement in the United States’ Treasuries. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped 1/2 basis point to 2.605 percent, the yield on the long-term 30-year bond also remained tad lower at 3.130 percent and the yield on short-term 2-year traded nearly steady at 2.014 percent.

The New Zealand government bonds gained, sending yields 2.8 basis points lower at the long end of the curve.