European markets shrugged off the negative sentiment in Asia, with the major indices post a healthy rally on Thursday. The German car sector leads the way as there is a hope that the country’s biggest car makers could у spared from US tariffs. German industrial orders data, which came out better than expected, added to the positive tone in the region. Nevertheless, global investors continue to prepare for implementation of US-China new import levies due tomorrow. So far, Britain’s FTSE 100 adds 0.56 per cent to 7,615, France’s CAC 40 gains 1.16 per cent to 5,382, while German DAX 30 rallies by 1.44 per cent to 12,494. US stock index futures climb north ahead of the official opening.
In the currency markets, euro is the best performer among majors today. EURUSВ received a boost from the reports that the ECB could hike earlier than expected. Signs of a hawkish shift in the central bank fuelled euro demand, while USD index subdued dynamics added to the buying pressure. The pair climbed above 1.17 but is yet to confirm the upside break as the current picture could quickly change should the Fed confirm its commitment two more rate hikes this year. So, it’s too early to claim victory for euro bulls because the greenback may yet resume the ascent within the uptrend. The immediate resistance for the EURUSD pair comes at 1.1720.
GBPUSD has also appreciated marginally, but lacks the bullish impetus despite the BoE’s Carney hawkish comments on the economy which fueled a rise in rate hike expectations this summer. Traders don’t haste to buy sterling even in the face of weaker buck and optimistic central bank due to two reasons – the remaining Brexit and economic data uncertainty. So, the pair will hardly be able to stage an impressive rally, especially ahead of FOMC meeting minutes and NFP employment report. The price has reached a daily high just below the 1.3270 level. The nearest goal for bulls lies at 1.33. The immediate support now comes around 1.32.
After two days of a limited bearish correction, USDJPY has resumed the upside move, but the impulse looks too weak, and the pair stays firmly below the 111.00 mark. There is no an obvious risk aversion in the global markets, which prevents the greenback from further losses against the yen. Further dynamics in the pair will depend on risk sentiment as well as on the FOMC rhetoric in the meeting minutes later today. Only a clear break above 111.00 will strengthen dollar’s positions against the safe haven Japanese currency which could yet rise as US-China trade war is on the horizon.
Crude oil prices swing between gains and losses on Thursday, with Trump’s tweets continue to innerve traders in the commodity markets. The US president insists urged OPEC to cut oil prices late Wednesday and scared off bulls. As a result, Brent struggles to regain a sustainable upside momentum and continues to fight for the $78 figure which remains the key level in the short term. The price needs a clear break above this level to get back to the 3.5-year highs above the $80 threshold. For now, it looks like there is no such an incentive in the market.
Spot gold briefly touched the $1,261 area on Wednesday, but failed to sustain the momentum and shows some bearish bias today. The yellow metal remains under an intense pressure, though the technical outlook has somewhat improved after two days of a corrective rebound. The asset needs a strong catalyst to shrug off the remaining selling pressure, with the $1,261 is the key upside target for now. On the flipside, the price needs to keep above $1,250 to avoid another sell-off in the short term.
Nathan Lambert, Head of Global FX Analytical Department