• Europe roundup: Sterling eases after EU says ready for no-deal brexit; Swiss Franc at 2-week low as stimulus hopes boost risk-appetite, European shares extend gains - Monday, August 19th, 2019

    Source: FxWire Pro - Media Round Ups / 21 Aug 2019 04:09:47   Europe/London

    Market Roundup

    • EU says ready for no-deal Brexit, 'British would be the biggest losers'
       
    • German economy could continue to shrink: Bundesbank
       
    • BoE's Carney says negative rates not an option for UK: Central Banking
       
    • Spain says no deal with Italy on migrants, offers its ports
       
    • Recall UK parliament to tackle Brexit crisis, opposition Labour Party says
       
    • Low eurozone inflation means more stimulus may be needed: ECB's Müller

    Economic Data Ahead

    • No major economic data releases
       

    Key Events Ahead

    • No significant event scheduled

    FX Beat

    DXY: The dollar advanced, extending gains for the fifth straight session, amid hopes of government action to stave off fears of a recession. The greenback against a basket of currencies traded flat at 98.22, having touched a high of 98.34 on Friday, its highest since August 2.

    EUR/USD: The euro edged higher, halting a 4-day losing streak after German Finance Minister Olaf Scholz stated that Germany has the fiscal strength to counter any future economic crisis, suggesting Berlin could provide up to 50 billion euros of extra spending. The European currency traded higher at 1.1097, having touched a low of 1.1066 on Friday, its lowest since August 1. Immediate resistance is located at 1.1129 (38.2% retracement of 1.1230 and 1.1066), a break above targets 1.1168 (61.8% 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 surged against the safe-haven Japanese yen as hopes of fresh stimulus measures from major economies have helped ease global recessionary fears. Markets now await the U.S. Federal Reserve’s Jackson Hole symposium this week to get clarity on the future path of interest rates. The major was trading 0.3 percent up at 106.66, having hit a low of 105.05 last week, its lowest since Jan 3. Investors’ will continue to track the broad-based market sentiment, as U.S. economic data calendar remains absolutely empty. Immediate resistance is located at 107.14 (21-DMA), a break above targets 107.73 (June 21 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 plunged from a 1-week peak hit in the previous session after the European Commission said that the EU was ready for a no-deal Brexit and that Britain would suffer most under such a scenario. The major traded 0.3 percent down at 1.2106, having hit a low of 1.2014 last week, it’s lowest since Jan. 2017. 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 1.2100 (10-DMA), a break below targets 1.2041 (August 13, Low). Against the euro, the pound was trading 0.4 percent down at 91.65 pence, having hit a high of 90.90 on Friday, it’s highest since July 31.

    USD/CHF: The Swiss franc declined to a 2-week low, as major central banks around the world hinted at more stimulus, easing fears about a sharp economic downturn. The major trades 0.3 percent down at 0.9805, having touched a high of 0.9809 earlier, 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 0.9745 (10-DMA), and any close below that level will drag it till 0.9705 (August 14 Low).

    Equities Recap

    European shares extended gains from the previous session, as German stocks jumped and investors cheered plans from Germany and China to counter slowing growth.

    The pan-European STOXX 600 index rose 1.1 percent at 373.70 points, while the FTSEurofirst 300 surged 1.1 percent to 1,472.05 points.

    Britain's FTSE 100 trades 1.2 percent up at 7,202.43 points, while mid-cap FTSE 250 rose 0.9 to 18,984.47 points.

    Germany's DAX rallied 1.6 percent at 11,742.21 points; France's CAC 40 trades 1.4 percent higher at 5,372.30 points.

    Commodities Recap

    Crude oil prices surged following a weekend attack on a Saudi oil facility by Yemeni separatists and as traders looked for signs that U.S.-China trade tensions could ease. International benchmark Brent crude was trading 0.5 percent higher at $58.83 per barrel by 1122 GMT, having hit a high of $61.48 on Tuesday, its highest since August 5. U.S. West Texas Intermediate was trading 0.4 percent up at $55.75 a barrel, after rising as high as $57.43 on Tuesday, its highest since August 1.

    Gold prices declined due to a stronger greenback and a recovery in equities, as hints of more stimulus from major central banks around the world eased concerns about a recession. Spot gold was trading 0.8 percent down at $1,499.18 per ounce at 1127GMT, having touched a high of $1,527.90 on Friday, its highest since August 13. U.S. gold futures also fell 0.5 percent to $1,516.80 an ounce.

    Treasuries Recap

    The U.S. Treasury yields continued upswing during the afternoon session ahead of few notable releases this week, with the main focus on the Federal Open Market Committee’s (FOMC) end-July monetary policy meeting minutes, scheduled to be released on August 21 by 18:00GMT. The yield on the benchmark 10-year Treasury yield jumped 7 basis points to 1.610 percent, the super-long 30-year bond yields surged 10-1/2 basis points to 2.107 percent and the yield on the short-term 2-year traded nearly 4-1/2 basis points higher at 1.521 percent.

    The United Kingdom’s gilt yields jumped during European trading hours, ahead of the country’s 10-year auction, scheduled to be held on August 20 amid hovering uncertainties over a Brexit deal, to be wrapped up by October 31. The yield on the benchmark 10-year gilts, jumped 3 basis points to 0.497 percent, the 30-year yield surged 6 basis points to 1.069 percent and the yield on the short-term 2-year traded 1 basis point higher at 0.513 percent.

    The German bunds suffered during European trading session Monday even after eurozone’s consumer price inflation (CPI) for the month of July rose lower than market expectations, with eyes still on the Germany’s manufacturing PMI for the similar month, scheduled to be released on August 22 for further direction in the debt market. The German 10-year bond yields, which move inversely to its price, jumped 4 basis points to -0.644 percent, the yield on 30-year note surged 9 basis points to -0.127 percent and the yield on short-term 2-year traded nearly stable at -0.906 percent

    The Japanese government bonds remained mixed at the time of closing after the country’s trade balance for the month of July shrunk into deficit as investors still eye the national consumer price inflation (CPI) for the similar period, scheduled to be released by end of this week, for further direction in the debt market. At close, the yield on the benchmark 10-year JGB note, which moves inversely to its price, plunged 23 basis points to -0.229 percent, the yield on the long-term 30-year jumped nearly 3 basis points to 0.213 percent and the yield on short-term 2-year slumped 28 basis points to -0.283 percent.

    The Australian government bonds slumped in subdued Asian session of the first trading day of the week ahead of the Reserve Bank of Australia’s (RBA) August monetary policy meeting minutes, scheduled to be released on August 20 by 01:30GMT. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped 4 basis points to 0.924 percent, the yield on the long-term 30-year bond surged nearly 6 basis points to 1.504 percent and the yield on short-term 2-year traded nearly 2 basis points up at 0.753 percent.

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