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Europe Roundup: Euro falls to three-week lows as U.S. yields climb, European shares retreat, Gold gains, Oil falls on renewed lockdowns, stronger dollar-January 11th,2021

Market Roundup

•Spanish Nov Industrial Production (YoY)   -3.8%,-2.6% forecast,-1.6% previous

•EU Jan Sentix Investor Confidence  1.3, 0.7 forecast, -2.7 previous

Looking Ahead – Economic Data (GMT)

•French 12-Month BTF Auction -0.602% previous

•French 3-Month BTF Auction -0.620% previous

•French 6-Month BTF Auction -0.605% previous

•15: 00 US Dec CB Employment Trends Index  98.81 previous

 •16:30 US 3-Month Bill Auction 0.090% previous

•18:00 US 3-Year Note Auction 0.211% previous

Looking Ahead - Economic events and other releases (GMT)

•14:00 UK MPC Member Tenreyro Speaks

•14:40 ECB President Lagarde Speaks

•17:00 FOMC Member Bostic Speaks

Fx Beat 

EUR/USD: The euro declined against dollar on Monday as widening U.S. Treasury yields and expectations of more fiscal stimulus lifted it for a third consecutive day, with the euro falling to a three-week low. At 103 basis points, the spread between the three-month and 10-year U.S. debt is at its steepest since late March and is approaching the 2020 highs of 123 bps. The 10-year yield of 1.10% is the highest since March 19, while the 10-year TIPS inflation break-even inflation rate of 2.07% is the highest since November 2018.As a result, the euro fell 0.5% to $1.2155, its lowest since Dec. 21, down nearly 2% from a high of $1.2349 last week. Immediate resistance can be seen at 1.2303 (23.6%fib), an upside break can trigger rise towards 1.2325 (Higher BB).On the downside, immediate support is seen at 1.2156 (50%fib), a break below could take the pair towards 1.2067(61.8%fib).

GBP/USD: Sterling declined against dollar on Monday as Britain’s chief medical adviser warned that the next few weeks of the pandemic will be the worst yet. Britain will open seven large-scale vaccination centres on Monday as part of the government’s plan to deliver to COVID-19 shots to all vulnerable people by mid-February. As market participants weigh up the economic impact of the virus against progress on the vaccine front, the possibility that the UK’s central bank will introduce negative interest rates is being priced in for as early as May 2021. At 12:30 GMT, the pound was down 0.4% versus the dollar, at $1.3501, having hit as low as $1.3483 as European markets opened. Immediate resistance can be seen at 1.3570 (23.6%fib), an upside break can trigger rise towards 1.3638(Jan 8th ).On the downside, immediate support is seen at 1.3461 (38.2%fib), a break below could take the pair towards 1.3379 (50%fib).

USD/CHF: The dollar rose against the Swiss franc on Monday as stronger dollar and higher U.S. Treasury yields pressured Swiss franc. The U.S. 10-year Treasury yield held firm above 1%, helping the dollar scale a near three-week peak against rival currencies. Investors also took note of Federal Reserve Vice Chair Richard Clarida's comments on Friday that the U.S. economy was headed for an "impressive" year, helped by coronavirus vaccines and potential for larger government spending. Immediate resistance can be seen at 0.8912 (38.2%fib), an upside break can trigger rise towards 0.8942 (23.6%fib).On the downside, immediate support is seen at 0.8885(50% fib), a break below could take the pair towards 0.8855 (61.8%fib).

USD/JPY: The dollar strengthened against the Japanese yen on Monday as sharp gains in U.S. yields and hopes for more stimulus to boost the world’s largest economy prompted some investors to temper bearish bets on greenback. President-elect Joe Biden, who takes office on Jan. 20 with Democrats able to control both houses of Congress, has promised “trillions” in extra pandemic-relief spending. That has pushed the yield on benchmark 10-year U.S. debt up more than 20 basis points to 1.1187% this year, which helped the dollar to a one-month high of 104.20 yen. Strong resistance can be seen at 104.48 (38.2%fib), an upside break can trigger rise towards 104.93 (23.6%fib).On the downside, immediate support is seen at 104.11(50%fib), a break below could take the pair towards 103.73 (61.8%fib).

Equities Recap

European stocks slipped from over 10-month highs on Monday as investors booked profits after a strong week, while surging coronavirus cases across the continent and mainland China dragged down energy and mining stocks.

At (GMT 12:30 ),UK's benchmark FTSE 100 was last trading down at 0.76 percent, Germany's Dax was down  by 0.81 percent, France’s CAC was last down by 0.77 percent.

Commodities Recap

Gold prices reversed course on Monday from a near six-week low touched earlier in the session, although a stronger dollar and higher U.S. Treasury yields capped bullion's gains.

Spot gold was up 0.3% at $1,853.96 by 0817 GMT, recovering from a six-week low of $1,816.53 per ounce hit during the session, while U.S. gold futures  gained 0.8% to $1,850.30. Prices had dropped 4.4% on Friday.

Brent crude oil prices fell as much as $1 per barrel on Monday, hit by renewed concerns about global fuel demand amid tough coronavirus lockdowns around the world, as well as a stronger U.S. dollar.

Brent was down 57 cents, or 1%, at $55.42 a barrel at 1205 GMT, after falling $1 to a session low of $54.99 earlier.U.S. West Texas Intermediate (WTI) slipped 26 cents, or 0.5%, to $51.98 a barrel.

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