• Europe roundup: Euro eases on political uncertainties, greenback rallies Amid U.S. China trade deal hopes, European shares nudge higher - Tuesday, November 5th, 2019

    Source: FxWire Pro - Media Round Ups / 05 Nov 2019 11:43:55   Europe/London

    Market Roundup

    • Gold eases on U.S.-China trade deal hopes
       
    • UK service sector stagnates
       
    • Oil edges higher amid OPEC cuts expectations
       

    Economic Data Ahead

    • (0830 ET/1330 GMT) The United States releases trade balance figures for the month of September. The economy's trade deficit is expected to have narrowed to $52.5 billion from 54.9 billion in August.
       
    • (0830 ET/1330 GMT) Statistics Canada is likely to report that international trade deficit narrowed to C$0.7 billion in September from C$0.96 billion in August.
       
    • (0945 ET/1445 GMT) Financial firm Markit releases final U.S. composite PMI for the month of October. The index posted a final reading of 51.2 in the previous month.
       
    • (0945 ET/1445 GMT) Markit Economics reports final U.S. services PMI for the month of October. The index posted a final reading of 51.0 in September.
       
    • (1000 ET/1500 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. non-manufacturing Purchasing Managers' index rose to a final reading of 53.5 in October from 52.6 in September.
       
    • (1000 ET/1500 GMT) The U.S. Labor Department releases Job Openings and Labor Turnover Survey (JOLTS) report for the month of September. The report is expected to show job openings eased to 7.028 million from 7.051 million in August.
       
    • (1000 ET/1500 GMT) The Investor's Business Daily (IBD)/ TechnoMetrica Institute of Policy and Politics (TIPP) will release U.S. Economic Optimism index for the month of November. The indicator rose to 52.6 in October.
       
    • (1630 ET/2130 GMT) API reports its weekly crude oil stock.

    Key Events Ahead

    • (0800 ET/1300 GMT) Federal Reserve Bank of Richmond President Thomas I. Barkin's speech
       
    • (1240 ET/1740 GMT) Federal Reserve Bank of Dallas President Robert Steven Kaplan gives a speech

    FX Beat

    DXY: The dollar index surged, extending previous session gains on optimism that U.S.-China trade talks will lead to de-escalation in tensions between both the economies. The greenback against a basket of currencies traded up at 97.58, having touched a low of 97.11 on Friday, its lowest since August 9.

    EUR/USD: The euro plunged to a near 1-week low amid growing political uncertainty as the main candidates to become Spain’s next prime minister clashed over how to handle Catalan separatism, ahead of a repeat election that opinion polls show could be as inconclusive as the one in April. The European currency traded 0.1 percent down at 1.1122, having touched a low of 1.1112 earlier, its lowest since October 30. Immediate resistance is located at 1.1141 (5-DMA), a break above targets 1.1162. On the downside, support is seen at 1.1106, a break below could drag it below 1.1083 (21-DMA).

    USD/JPY: The dollar rallied to a 5-day peak as Beijing and Washington showed signs of progress in trade talks. On Monday, The Financial Times stated that the United States is considering whether to drop some tariffs on Chinese goods.  The major was trading 0.3 percent up at 108.84, having hit a high of 108.89 earlier, its highest since October 31. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. trade balance, JOLTS Job Opening, service PMI by Markit and ISM. Immediate resistance is located at 109.03 (October 28 High), a break above targets 109.31 (August 1 High). On the downside, support is seen at 108.29 (October 21 Low), a break below could take it near at 108.03 (October 14 Low).

    GBP/USD: Sterling rose, reversing some of its previous session losses, after data showed UK's IHS Markit services Purchasing Managers’ Index edged up to 50.0 from 49.5 in September. Moreover, yesterday's weak PMI data muted any expectations of policy changes from the Bank of England at a policy meeting this week. The major traded 0.2 percent up at 1.2898, having hit a high of 1.2975 on Thursday, it’s highest since October 22. Investors’ attention will remain on the development surrounding Brexit and UK service PMI, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2949 (October 24 High), a break above could take it near 1.3000. On the downside, support is seen at 1.2806, a break below targets 1.2748. Against the euro, the pound was trading 0.2 percent up at 86.16 pence, having hit a high of 85.74 last month, it’s highest since May 8.

    USD/CHF: The Swiss franc eased to a near 1-week low as risk appetite improved amid growing optimism the United States and China are on the verge of reaching a preliminary agreement. The major trades at 0.3 percent up at 0.9907, having touched a low of 0.9850 on Friday, it’s lowest since October 21. On the higher side, near-term resistance is around 0.9918 (21-DMA) and any break above will take the pair to the next level till 0.9934. The near-term support is around 0.9843, and any close below that level will drag it till 0.9800.

    Equities Recap

    European shares rallied amid hopes that a U.S.-China trade deal could be signed this month.

    The pan-European STOXX 600 index surged 0.05 percent at 403.56 points, while the FTSEurofirst 300 rallied 0.1 percent to 1,583.57 points.

    Britain's FTSE 100 trades 0.3 percent up at 7,393.86 points, while mid-cap FTSE 250 fell 0.05 to 20,243.73 points.

    Germany's DAX rose 0.2 percent at 13,158.38 points; France's CAC 40 trades 0.4 percent higher at 5,835.24 points.

    Commodities Recap

    Crude oil prices rallied to a 2-1/2 month peak as markets eye a possible extension or even a deepening of OPEC’s current production curbs as early as next year and hopes for a Washington-Beijing trade deal.  International benchmark Brent crude was trading 1.1 percent at $62.73 per barrel by 1035 GMT, having hit a high of $62.86 earlier, its highest since September 26. U.S. West Texas Intermediate was trading 0.8 percent up at $56.93 a barrel, after rising as high as $57.39 on Monday, its highest since September 24.

    Gold prices declined as U.S.-China trade deal hopes buoyed the greenback and improved risk appetite. Spot gold was trading 0.3 percent down at $1,502.36 per ounce by 1037 GMT, having hit a high of $1,516.05 on Friday, its highest since Oct. 25. U.S. gold futures declined 0.2 percent to $1,508.20 per ounce.

    Treasuries Recap

    The U.S. Treasuries slumped during the afternoon session ahead of the country’s ISM non-manufacturing PMI for the month of October, scheduled to be released today by 15:00GMT and the September JOLTs job openings data, also due today. In addition, speeches by members of the Federal Open Market Committee (FOMC), Kaplan and Kashkari, due later in the day shall add further insights into the debt market. The yield on the benchmark 10-year Treasury yield jumped 3 basis points to 1.819 percent, the super-long 30-year bond yield surged nearly 4-1/2 basis points to 2.316 percent and the yield on the short-term 2-year traded tad higher at 1.600 percent.

    The United Kingdom’s gilts fell during European trading hours after the country’s services PMI for the month of October touched the 50-point neutral mark, which separates expansion from contraction, a sign that the sector shall now start witnessing further expansion in the near-term. Investors will now keep a close eye on the Bank of England’s (BoE) monetary policy meeting, scheduled to be concluded on November 7 by 12:00GMT for further direction in the debt market. The yield on the benchmark 10-year gilts, gained nearly 1-1/2 basis points to 0.677 percent, the 30-year yield surged 2-1/2 basis points to 1.187 percent while the yield on the short-term 2-year hovered around 0.515 percent.

    The German bunds plunged during European session ahead of the eurozone’s services PMI for the month of October, scheduled to be released on November 6 by 09:00GMT and the September retail sales, also due for release on the same day by 10:00GMT for additional direction in the debt market. The German 10-year bond yield, which move inversely to its price, jumped nearly 3 basis points to -0.320 percent, the yield on 30-year note surged nearly 4 basis points to 0.202 percent while the yield on short-term 2-year remained flat at -0.653 percent.

     The Australian government bonds slumped during Asian session of the second trading day of the week tracking investors’ improved optimism over the U.S.-China trade deal. Meanwhile, the Reserve Bank of Australia (RBA) remained unchanged in its monetary policy decision, revealed early today. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped nearly 5 basis points to 1.120 percent, the yield on the long-term 30-year bond surged nearly 5 basis points to 1.796 percent and the yield on short-term 2-year gained 3-1/2 basis points to 0.899 percent.

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