Macro economics

Analytics on 17/06/2020. Stocks marginally higher, euro struggles to regain the upside momentum

After some hesitation before the opening bell, European stock markets edged higher on Wednesday as investors shrugged off the coronavirus-related worries and focused instead on the outlook for the economic recovery after yesterday’s strong US retail sales data.

According to the latest reports, Germany plans to ban events in the country until end-October at least, citing concerns over a second wave of coronavirus pandemic. At the same time, German finance minister Olaf Scholz noted that there won’t be a massive lockdown even if a second virus wave comes. Also, the German government urged other EU member states to prepare for a no-deal Brexit, as the German foreign office now convinced that the transition period will not be extended.

On the data front, Eurozone April construction output contracted by -14.6% versus -14.1% m/m prior, while Eurozone May core CPI arrived at +0.9% versus the preliminary result of+0.9% y/y. Against this backdrop, the UK’s FTSE 100 gains 0.65% to 6,284. Italy’s FTSE MIB edges higher by 0.40 percent to 19,704, France’s CAC 40 adds 0.94 percent to 4,998, while German DAX 30 rises by 0.51 percent to 12,377. U.S. stock index futures pushed higher before the bell as investors continue to digest Powell’s comments on the central bank’s readiness to support and speed up the economic recovery.

In currencies, the euro edged lower after the bullish attempts faded marginally below 1.13 earlier in the day. EURUSD has settled around 1.1250, struggling for direction amid mixed USD dynamics ahead of the second testimony by Fed’s Powell and housing data out of the United States. On the positive side, the euro is supported by the gradual re-opening of economies in Europe. On the other hand, second-wave concerns are capping its upside potential. In the short term, the pair needs to hold above the 1.1220 support in order to avoid a correction under 1.12.

In commodities, oil prices retreated to the opening levels after failed attempts to challenge the $41.500 region. Despite Brent lacks the bullish impetus, market sentiment looks relatively upbeat, with recovery potential persisting. Later in the day, traders will focus on the EIA weekly inventory data and Powell’s testimony that could set the tone for global markets in general. From the technical point of view, the key support still arrives at $40 while on the upside, Brent crude needs to exceed the $41,60 region to extend the ascent.

Nathan Lambert, Head of Global FX Analytical Department

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Interest rates

Country Rate Value
USA Federal Funds 0,25 %
Switzerland 3 Month LIBOR Range -0.75 %
United Kingdom Repo Rate 0,10 %
EU Refinancing Tender 0,00 %
Japan Overnight Call Rate -0,10 %
New Zealand Official Cash Rate 0,25 %
Australia Cash Rate 0,25 %
Canada Overnight Rate Target 0,25 %
All rates
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