God Save The Queen: GBP goes down to near 3-week low after May criticizes EU Brexit proposals

Today`s news are all about UK. UK Prime Minister May has hit out at Brussels’ first draft of a Brexit treaty, sending GBP to sink waters to near 3-week low.

Sterling fell as much as 1% to $1.3772, weakest level since February 9. Today’s decline takes its loss for the month to nearly 3 per cent — the most since October 2016. The GBP/USD is now trading within broad bearish trend channel sloping downwards and the pair needs to break below 1.3737 support line represented by 38.2% Fibonacci retracement line of the upmove from 1.2770 to 1.4343 to confirm further weakness.

The UK domestic data front is not helping Pound a lot with the UK manufacturing PMI decelerating to 55.2 in February, although it came out a bit better than expected.

The move lower comes after Mrs May rejected a EU proposal that could keep Northern Ireland under the bloc’s rules, saying no UK prime minister could “ever” accept such a plan. The comments set Mrs May on a collision course with Brussels and rekindled market fears over a so-called “hard Brexit” that would see the UK leave the EU without a deal in place that would give it and its companies access to the bloc’s single market.

Elsewhere in EU moods are not setting high.

European markets are following Wall Street down after a rough Wednesday which saw the S&P 500 lose 1.1%t, leaving it 3.9% lower for February and marking the biggest monthly decline since January 2016. Overnight, Asian markets were mixed but China benchmarks were up after positive manufacturing data. Briefly all things look like this:

  • London’s FTSE 100 is 0.1% lower
  • Pan-European Euro Stoxx 600 index is down 0.3%
  • Frankfurt’s DAX is down 0.5%
  • Tokyo’s Topix closed down 1.6%

Sources: 

https://www.ft.com/markets

https://www.ft.com/content/6877f7fe-1cf0-11e8-aaca-4574d7dabfb6

https://www.ft.com/content/51190c1e-1c6f-11e8-956a-43db76e69936

https://www.ft.com/content/f815edda-1ca0-11e8-956a-43db76e69936

https://www.ft.com/content/127d054a-1d15-11e8-aaca-4574d7dabfb6

https://www.ft.com/content/3b28cd0c-1ca3-11e8-aaca-4574d7dabfb6

https://uk.investing.com/news/economy-news/brexit-advances-at-wto-as-britain-sets-out-new-services-terms–diplomats-1059305

https://uk.investing.com/news/stock-market-news/european-shares-drop-as-carrefour-wpp-results-get-frosty-reception-1060510

https://www.fxstreet.com/analysis/gbp-usd-forecast-sterling-hammered-lower-by-brexit-draft-further-downside-limited-201803010935

 

Global stocks set to reach three-month low after turbulent February but USD jumps to five-week high

Global equities are on track to end February down 3.5%, their first monthly loss since October 2016. That`s the reaction of markets to U.S. Federal Reserve chair Jerome Powell, who said on Tuesday that recent data had strengthened his confidence on inflation, prompting traders to raise bets that the Fed will squeeze in a fourth rate hike this year.

U.S. stocks suffered their biggest daily drops since a selloff three weeks ago, with the Dow Jones industrial average falling nearly 1.2%, or about 300 point

In Europe, nearly all the continent’s major bourses traded in negative territory in mid-morning trade. The Stoxx Europe 600 index, the region’s broadest measure of share prices, fell around 0.4%, with most sectors in the red. Germany’s DAX performance index slipped 0.18% by mid-day in Frankfurt while Britain’s FTSE 100 was marked 0.38% lower in London.

World stocks were also set to snap a record 15-month winning streak due to data signaling a slowdown in China’s manufacturing and Japan’s industrial output.

Sentiment toward the mining sector and China’s stocks took a knock after the country’s official gauge of manufacturing managers’ growth expectations came in at a 20-month low, falling to 50.3 in February — down a full point from January and its largest fall in more than six years.

European mining stocks are also lower after the Chinese data, with the Stoxx mining stocks down 1.5%.

Dollar jumps to five-week high, though. U.S. dollar rose to its strongest level in more than five weeks, boosted by bets that the Fed could increase interest rates as many as four times this year.

Sources:

https://www.ft.com/content/a67bd056-1c24-11e8-956a-43db76e69936

https://www.investing.com/news/stock-market-news/wall-street-on-course-for-february-loss-first-in-10-months-1316607

https://www.thestreet.com/story/14503821/1/global-stocks-extend-declines-as-investors-cast-hawkish-hue-on-powell-testimony.html

https://www.thestar.com.my/business/business-news/2018/02/28/global-stocks-slip-yields-rise-on-fed-chiefs-testimony/

http://www.euronews.com/2018/02/28/global-funds-cut-stocks-to-three-month-low-after-turbulent-february-reuters-poll

https://www.bnn.ca/fed-s-powell-sends-global-stocks-reeling-to-five-day-low-1.1013431

https://www.wsj.com/articles/global-stock-markets-continue-advance-1519691701

http://www.livetradingnews.com/morning-briefing-global-stocks-178-75934.html#.Wpa29lWWaCg

https://www.investing.com/news/economy-news/top-5-things-to-know-in-the-market-on-wednesday-1316211

Asian shares slide lower as weak China data adds to Fed rate worries

Morning Wednesday news: China stocks slide as nation`s manufacturing PMI hits 20-month low, Dollar holds steady and Gold hovers at two-week low. Powell’s comments on Tuesday fueled speculation that the FED Open Market Committee will push through rate rises this year

In details, the event is an actual reaction to yesterday`s comments made by Jay Powell which has fueled speculation that the Federal Open Market Committee will push through four rate rises this year, a prospect that sent the dollar and Treasury yields higher.

MSCI’s broadest index of Asia-Pacific shares outside Japan slipped more than 1%, its biggest daily percentage drop since February 9, 2018 when world financial markets were battered by concerns U.S. inflation is picking up.

China’s blue-chip CSI300 skidded 0.6% while Shanghai’s SSE (LON:SSE) Composite fell 0.8 percent and Hong Kong’s Hang Seng index declined more than 1%.

Growth in China’s services industry also slowed, suggesting the key sector was starting to display signs of fatigue.

In Japan, the world’s third-largest economy, industrial output in January took its biggest tumble since a devastating earthquake in March 2011, highlighting a weakening in demand and a build up of inventory. Japan’s Nikkei stumbled 1 percent on a slightly firmer yen.

Growth in India’s factory activity slowed too in February.

In commodities, oil prices extended declines on weak output data from China and Japan and as an industry data showed an increase in U.S. crude stockpiles.

Brent crude futures fell 40 cents to $66.23 a barrel, while U.S. crude was last down 33 cents at $62.68.
Spot gold eased to $1,317.61 an ounce, not far from Tuesday’s $1,313.26 which was the lowest in three weeks.

Spot gold eased to $1,317.61 an ounce, not far from Tuesday’s $1,313.26 which was the lowest in three weeks.

In currencies, the dollar held on to gains after rallying against most major currencies on Tuesday. It hovered near a recent 1-1/2 month top against the Australian dollar and held near a three-week high on the euro at $1.2221.

Sources: 

https://www.ft.com/content/a67bd056-1c24-11e8-956a-43db76e69936

https://www.reuters.com/article/us-global-markets/asian-shares-slide-as-weak-china-japan-manufacturing-data-add-to-fed-worries-idUSKCN1GC03R

https://www.cnbc.com/2018/02/27/asia-markets-powell-testimony-china-pmis-and-earnings-in-focus.html

http://uk.businessinsider.com/ap-asian-shares-fall-after-us-fed-chief-says-hes-optimistic-2018-2

https://www.nasdaq.com/article/asian-shares-follow-wall-street-lower-on-rate-hike-worries-20180228-00162

https://www.theglobeandmail.com/globe-investor/inside-the-market/market-updates/asian-shares-lurch-lower-as-fed-revives-fears-of-faster-rate-hikes/article38140735/?cmpid=rss

https://www.investing.com/news/stock-market-news/asian-shares-slide-as-weak-china-japan-manufacturing-data-add-to-fed-worries-1315766

As US data disappoints markets EUR/USD grips to 1.2300 after Powell`s comments

It’s his first speech, the market is already in a higher volatility phase. The Nasdaq (IXIC) is just 1.12 percent below its record high hit a month ago, while the S&P and the Dow are trading 3.2% and 3.4% below their life highs, respectively.

Fed policymakers anticipate three rate increases this year, and Powell gave no indication in prepared remarks to the House Financial Services Committee that the pace needs to quicken even as the “tailwinds” of government stimulus and a stronger world economy propel the U.S. recovery.

As for EUR/USD it is fluctuating near 1.2300

Spot has given away initial gains on Tuesday in response to a renewed pick up in the buying interest around the buck following Powell’s first congressional testimony.

Fed’s Powell stressed the economic outlook remains strong while he sees the tightening cycle continuing at a gradual pace over the 2018-2020 period.

On the positioning front, US Durable Goods Orders contracted 3.7% MoM in January and the trade deficit widened to $74.4 billion during the same period

Powell noted that wages should increase at a faster pace while he did not appear concerned over financial market volatility. He also suggested that the gradual reduction of the accommodative monetary conditions should prop up the solid labour market and lift prices towards the inflation target.

EUR/USD levels to watch

At the moment, the pair is losing 0.09% at 1.2306 facing the immediate support at 1.2260 (low Feb.22) followed by 1.2206 (low Feb.9) and finally 1.2165 (low Jan.18). On the other hand, a break above 1.2361 (21-day sma) would target 1.2366 (10-day sma) en route to 1.2537 (high Jan.25).

Sources: 

https://www.investing.com/news/stock-market-news/stock-futures-dip-ahead-of-powells-testimony-1313914

https://www.ft.com/content/9d8b5ec6-1bb6-11e8-aaca-4574d7dabfb6

https://www.investing.com/news/economy-news/top-5-things-to-know-in-the-market-on-tuesday-1313442

https://www.sfgate.com/news/article/Powell-says-outlook-strong-signaling-gradual-12711881.php

https://www.marketwatch.com/story/dollar-holds-steady-before-fed-boss-powell-talks-to-congress-2018-02-27

https://www.wsj.com/livecoverage/fed-jerome-powell-february-2018-testimony

 

Global stocks advance ahead of FED Chairman Jerome Powell’s awaited first congressional testimony later in the day

European bourses are higher, tracking an improving mood on Wall Street overnight ahead of the inaugural testimony by Federal Reserve chair Jay Powell to Congress.

The event is likely to help define sentiment, playing into investors’ expectations for the pace of rate tightening in the US, where the return of inflation looks to give the central bank more room to act. It has provided one of the main market themes of 2018, as investors calibrate the potential consequences and the relative outlook for speed of monetary policy tightening around the world.

Every Fed chair goes before Congress twice a year to report on the state of the economy. Investors will be paying even closer attention this time for clues on how quickly the Fed might raise interest rates if inflation picks up.

Investors say that expectations that Powell will be sensitive to financial markets appear to be running high. But he hasn’t said he will sacrifice policy normalization for the sake of financial markets. Certainly it seems that there is room for disappointment in markets. In the meantime, the dollar is slipping back from the highs for the month it touched three sessions ago. It is down 0.1 per cent on the session at 89.735.

Positive sentiment has spread from Wall Street, via much of Asia to Europe, although Chinese stocks ended a winning streak of about six sessions.

European shares are expected to gain, with spread-betters looking to a higher opening of about 0.4 to 0.5% in Britain’s FTSE, France’s Cac and Germany’s Dax.

Japan’s Nikkei rose 1.1% to three-week highs while MSCI’s broadest index of Asia-Pacific shares outside Japan also hit a three-week high before giving up gains on profit-taking in Chinese shares.

Mainland China’s CSI 300 fell 1.5% and Hong Kong’s Hang Seng fell 0.9%

On Wall Street, the S&P 500 advanced 1.18 percent on Monday helped by a fall in U.S. bond yields.

—–

Sources: 

https://www.investing.com/news/stock-market-news/asian-shares-near-threeweek-high-ahead-of-powells-testimony-1313088

https://www.ft.com/markets

https://www.ft.com/content/8522e452-1b5d-11e8-aaca-4574d7dabfb6

http://money.cnn.com/2018/02/27/news/economy/federal-reserve-congress-powell/index.html

https://www.thestreet.com/video/14500365/5-things-to-know-about-federal-reserve-chairman-jerome-powell.html

http://www.abc.net.au/news/2018-02-27/wall-street-surges-ahead-jerome-powell-fed-testimony-asx/9487702

 

This week ahead: top news to watch this week

Fellow traders, let us have a look at upcoming week in terms of important economic news.

Below you can find short table of major economic news during this week:

Monday: President’s Day in USA, Wall Street will remain closed. In the UK, investors will be looking ahead to a second reading on British growth data for further hints on the health of the economy and the likelihood of the Bank of England raising interest rates this year.

Tuesday: AUD Reserve Bank of Australia Meeting’s Minutes + GBP Inflation Report Hearings. The BoE will hold its Inflation Hearings, where Governor Mark Carney and his colleagues will discuss recent inflation developments before the Treasury Select Committee. The BoE has been keeping the interest rates steady before, but signaled it was likely to raise rates sooner and by more than it thought a few months ago as it seeks to keep a grip on inflation. Tuesday will also bring results from retail heavyweights Walmart (NYSE:WMT) and Home Depot (NYSE:HD), so investors should be watching closely these two giants.

Wednesday: EUR Non-monetary policy’s ECB meeting + USD FOMC Minutes. The most important here being FOMC Minutes. With a pre-set regularity, a nation’s Central Bank has an economic policy meeting, in which board members took different measures, the most relevant one, being the interest rate that it will charge on loans and advances to commercial banks. Besides the FOMC minutes, markets will also be paying close attention to comments from around a dozen Fed speakers this week for their views on the recent uptick in inflation and how that can affect monetary policy.

Thursday: EUR ECB Monetary Policy Meeting Accounts + CAD Retail Sales (MoM) (December). Minutes from the ECB’s January policy meeting will be published during the day. The ECB said it will keep its €2.5 trillion stimulus program in place for as long as needed at that meeting, and stated that there are “very few chances” that it will change interest rates this year.

Friday: JPY Japanese Statistics Bureau inflation figures (January) + EUR Consumer Price Index (YoY) (January). Most important news will come from Tokyo, where at 8:50 AM Tokyo time BoJ will publish fresh data on monthly inflation figures. Market analysts expect the headline figure to remain positive, rising 1.3% year-on-year, which would be the 13th straight month of annual increases.

Sources:

https://www.investing.com/news/economy-news/economic-calendar–top-5-things-to-watch-this-week-1268699

https://www.investing.com/economic-calendar/

https://www.fxstreet.com/macroeconomics/central-banks/fed?utm_source=NLecocal&utm_medium=email&utm_content=intext&utm_campaign=eco-cal-weekly-schedule

https://www.fxstreet.com/economic-calendar