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ECM: Europe Roundup: Sterling hits 6-week low despite upbeat
 
EUR/USD -0.2%, USD/JPY +0.4%, GBP/USD -0.1%, DXY +0.2%

FTSE +0.1%, CAC +0.1%, Brent -0.8%, Gold -0.4%, Copper +0.3%

USD/JPY hits 2-week high at 114.33, eyes Feb high at 114.95

DXY higher to fresh 7-week high at 102

FTSE steadies after hitting new life-time high at 7,394.61

EZ Feb flash Inflation 2.0% y/y vs previous 1.8%. 2.0% forecast

EZ Jan Producer prices 0.7% m/m, 3.5% y/y vs previous 0.8% revised /1.6%. 0.6%/3.2% forecast

EZ Jan unemployment rate 9.6% vs previous 9.6%. 9.6% forecast

Great Britain Feb Markit/CIPS Construction PMI 52.5 vs previous 52.2. 52.2 forecast

Germany Jan Import prices 0.9% m/m, 6.0% y/y vs previous 1.9%/3.5%. 0.4%/5.5% forecast

Switzerland Q4 GDP 0.1% q/q, 0.6% y/y vs previous 0.1%/1.4% revised 0.5% q/q forecast

Switzerland Jan Retail sales -1.4% vs previous -4.1% revised

G20 finance leaders seen keeping FX language intact- ex-MOF Watanabe

Economic Data Ahead

(0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 10,000 to a seasonally adjusted 243,000 for the week ended Feb. 25 while continuing claims for the week ended Feb. 17 is expected to rise to 2.065 m from 2.060 m.

(0830 ET/1330 GMT) The Statistics Canada is expected to report that gross domestic product increased at a 2.0 percent annual rate in the fourth quarter after rising at a 3.5 percent pace in the third quarter. While on monthly basis, it is likely to rise 0.3 percent in December, after posting a growth of 0.4 percent in November.

(0945 ET/1445 GMT) The NAPM-New York releases ISM-New York Index for the month of February. The index stood at 57.7 in the previous month.

(1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending February 24.

(1730 ET/ 2230 GMT) The Australian Industry Group (AiG) releases its Performance of Services Index for the month of January. The index stood at 54.5 in December.

(1830 ET/2330 GMT) Japan's Statistics Bureau will release its National Consumer Price Index for the month of January. The index rose at an annualized rate of 0.3 percent in December.

(1830 ET/2330 GMT) Japan's Statistics Bureau is expected to report that unemployment rate edged down 3.0 percent in January from 3.1 percent in the previous month.

(1830 ET/2330 GMT) Japan's overall household spending probably declined at an annualized rate of 0.4 percent in January after tumbling 0.3 percent in December.

Key Events Ahead

(0945 ET/1445 GMT) FedTrade operation 30-year Fannie Mae/Freddie Mac (max $1.25 bn)

(1245 ET/1745 GMT) Bank of Canada Deputy Governor Tim Lane will give a speech on climate change and Canada's economic future.

(1800 ET/2300 GMT) Federal Reserve Bank of Cleveland President Loretta Mester participates in a moderated conversation on "Leadership" before a Power Talk event hosted by Barnard College.

FX Beat

DXY: The dollar rallied across the board as investors await Fed Yellen's speech due tomorrow for further insights on the strength of the U.S. economy and interest rate path. The greenback against a basket of currencies traded 0.2 percent up at 101.99, having hit a high of 102.00 earlier, it’s strongest since Jan. 11. FxWirePro's Hourly Dollar Strength Index stood at 157.13 (Highly Bullish) by 1000 GMT.

EUR/USD: The euro slumped for the third consecutive day, as the greenback rose to 7-week high, ahead of the key speech by Federal Reserve Chief Janet Yellen on Friday. Markets seem to have ignored Eurozone's preliminary consumer prices figures, which rose at an annualized 2.0 percent in February, matching prior surveys and up from January’s 1.8 percent. The European currency traded 0.2 percent down at 1.0527, having hit a low of 1.0514 the day before, it’s lowest since Feb. 22. FxWirePro's Hourly Euro Strength Index stood at -7.61 (Neutral) by 1000 GMT. The upside remains capped by 21- 4H EMA and any violation above will take the pair till 1.06305/1.0680. On the lower side, next immediate support stands at 1.05150 and any break below targets 1.04935 (Feb 22 low)/1.04530 (Jan 11 low)/1.03400.

USD/JPY: The dollar rallied to a 2-week high above the 114.00 handle on the back of growing expectations that the Fed would raise interest rates at its March meeting and President Trump's less combative tone in his first speech to Congress. Moreover, increasing investors' appetite for riskier assets hampered the Japanese Yen's safe-haven appeal. The major trades 0.4 percent higher at 114.21, having hit high of 114.31 earlier, its highest since Feb. 15. FxWirePro's Hourly Yen Strength Index stood at -15.83 (Neutral) by 1000 GMT. The minor resistance is around 114.30 (38.2% retracement of 118.64 and 111.59) and any break above will take the pair till 114.95 (Feb 15 high)/115.94. On the lower side, minor support is around 113 (200- H MA) and any break below 113 will drag it till 112/111.65.

GBP/USD: Sterling slumped, extending losses for the fifth consecutive session, as uncertainty over the prospects of British economy weighed on market sentiment. The major skidded to a 6-week low after data portrayed a mixed picture of Britain's economic outlook, with the manufacturing activity slowing, while the construction industry picking up slightly in February. Sterling trades 0.15 percent lower at 1.2274, having hit a low of 1.2258 earlier, its weakest since Jan. 19. FxWirePro's Hourly Sterling Strength Index stood at -71.11 (Bearish) by 1000 GMT. On the lower side, further weakness can be seen below 1.2260 and any violation below will drag the pair down till 1.2200. The minor intraday bullishness can happen only above 1.2295 (21- H EMA) and any break above will take it till 1.233 (Hourly Kijun-Sen)/ 1.2435 (200- H MA). Against the euro, the pound trades flat at 85.81 pence, having hit an early 2-week low of 85.90.

USD/CHF: The Swiss franc eased as the dollar rallied across the board after comments from Fed officials strengthened the case of an imminent U.S. interest rate hike. The major trades 0.2 percent higher at 1.0105, hovering towards a high of 1.0129 hit in the previous session, its strongest since Feb. 22. FxWirePro's Hourly Swiss Franc Strength Index stood at 74.61 (Bullish) by 1000 GMT. The pair has formed a temporary top around 1.01405 and any break above targets 1.0160 (61.8% retracement of 1.03436 and 0.98696)/1.0200. On the lower side, 1.0065 (55- 4 H EMA) will be acting as major intraday support and any break below will drag the pair till 1.000/0.9965 (Feb 16th low).

AUD/USD: The Australian dollar tumbled to a 3-week low as renewed buying interest around the greenback and declining commodities further dented the demand for the Aussie. The major trades 0.7 percent down at 0.7620, having touched a low of 0.7612 earlier in the session, it’s lowest since Feb. 2. FxWirePro's Hourly Aussie Strength Index stood at -75.40 (Slightly Bearish) by 1000 GMT. On the lower side, the major support stands at 0.7603 (23.6% retracement of 0.71599 and 0.7740) and any break below will drag it down till 0.7565 (55- day EMA)/0.7500 (50- day MA)/0.74450 (Jan 13 low). The major resistance is around 0.77497 (161.8% fibo) and a break above will take it till 0.77783 (Nov 8th high)/0.7800.

Equities Recap

European shares eased but stayed within the sight of 15-month highs, while the dollar rose across the board on growing expectations that the Federal Reserve will hike interest rates later this month.

The pan-European STOXX 600 index decreased 0.1 percent to 375.36 points, while the FTSEurofirst 300 index eased 0.05 percent to 1,480.59 points.

Britain's FTSE 100 trades 0.07 percent lower at 7,377.58 points, while mid-cap FTSE 250 shed 0.38 percent to 18,910.44 points.

Germany's DAX edged down 0.1 percent at 12,054.79 points; France's CAC 40 trades 0.02 percent higher at 4,961.20 points.

Tokyo's Nikkei rose 0.88 percent to 19,564.80 points, Australia's S&P/ASX 200 index advanced 1.19 percent to 5,772.50 points and South Korea's KOSPI gained 0.53 percent to 2,102.65 points.

Shanghai composite index fell 0.5 percent to 3,230.03 points, while CSI300 index dropped 0.7 percent to 3,435.10 points. Hong Kong’s Hang Seng shed 0.2 percent to 23,728.07 points.

Commodities Recap

Crude oil prices declined after an industry report showed stockpiles in the United States rose by 1.5 million barrels last week. International benchmark Brent crude was trading 0.5 percent down at $55.99 per barrel by 0937 GMT, having hit a high of $57.01 in the previous session, its highest since Feb. 23. U.S. West Texas Intermediate crude fell 0.4 percent at $53.41 a barrel, after tumbling to a trough of $54.20 on Tuesday, its weakest since Feb. 17.

Gold prices eased as the greenback rallied to a 7-week high on the back of hawkish comments from U.S. Federal Reserve officials that boosted expectations of a U.S. interest rate hike in March. Spot gold declined 0.45 percent to $1,243.45 per ounce by 0940 GMT, having touched a high of $1,263.74 earlier in the week, its highest since Nov. 11. U.S. gold futures fell 0.3 percent to $1,245.30.

Treasuries Recap

The U.S. Treasuries traded modestly higher on expectations of lower initial jobless claims, scheduled to be released later in the day. The yield on the benchmark 10-year Treasury jumped 6 basis points to 2.42 percent, the super-long 30-year bond yield surged 5 basis points to 3.01 percent and the yield on short-term 2-year note also bounced 7 basis points to 1.28 percent.

The UK gilts rebounded after investors largely shrugged off higher-than-expected construction Purchasing Managers’ Index (PMI) for the month of February. The yield on the benchmark 10-year gilts, plunged nearly 3 basis points to 1.16 percent, the super-long 30-year bond yields also fell nearly 2 basis points to 1.75 percent and the yield on the short-term 2-year traded lower by 1 basis point at 0.10 percent.

The German government bunds dived after reading the better-than-expected Eurozone consumer price inflation (CPI) during the month of February. The yield on the benchmark 10-year bond, rose 1 basis point to 0.28 percent, the long-term 30-year bond yields also jumped 1 basis point to 1.09 percent while the yield on short-term 1-year bond moved higher by nearly 1 basis point to -0.83 percent.

The Japanese government bonds slid, tracking weakness in U.S. Treasuries; however, strong demand at the 10-year auction held earlier today has cushioned a steeper fall in bond prices. Further, expectations of a rise in January consumer price inflation (CPI) also weighed on bond prices. The benchmark 10-year bond yield, rose nearly 1 basis point to 0.06 percent, the long-term 30-year bond yields jumped nearly 3-1/2 basis points to 0.87 percent and the yield on the short-term 3-year note traded nearly 1/2 basis point higher at -0.17 percent.

The New Zealand government bonds ended the session tad higher after the Reserve Bank of New Zealand Governor Graeme Wheeler maintained 'neutral' economic and policy outlook, besides, adding that risks remain tilted to the downside. The yield on the benchmark 10-year bond, fell 1 basis point to 3.34 percent at the time of closing, the yield on 7-year note also slid nearly 1 basis point to 2.89 percent and the yield on short-term 2-year note traded 1 basis point lower at 2.20 percent.

The Australian bonds rose modestly, following weaker-than-expected trade balance during the month of January. Further, investors will also be focusing on the Reserve Bank of New Zealand’s (RBNZ) monetary policy meeting, scheduled to be held on March 7 for further direction in the bond market. The yield on the benchmark 10-year Treasury note, fell 1/2 basis point to 2.81 percent, the yield on 15-year note also slipped 1/2 basis point to 3.24 percent while the yield on short-term 2-year slumped nearly 2 basis points to 1.84 percent.

Source