Macro economics

Analytics on 19.02.2021. Equities cautiously higher, pound exceeds 1.40

European stocks are marginally higher on Friday as investor sentiment has improved somehow ahead of the weekend. The French luxury-goods company Hermès International posted falling net profit in 2020, but said revenue returned to growth in the second half of the year. Its shares rose nearly 6% on the news. Meanwhile, according to sources, US President Joe Biden will tell G7 leaders that the US is not looking for a new cold war with China.

On the data front, the flash reading of the IHS Markit Eurozone composite PMI rose to a two-month high of 48.1 in February from 47.8 in January. IN the UK, retail sales plunged in January, dropping 8.2% from the previous month, a much steeper decline than expected.

Against this backdrop, the FTSE 100 in London gains 0.01% to 6,618, Italy’s FTSE MIB adds 0.22 percent to 22,972, France’s CAC 40 is up by 0.46% to 5,754, while the German DAX 30 gains 0.43% to 13,946. US stock index futures are rising ahead of the opening bell on Friday, and it looks like the indexes are ready to set fresh record tops during the upcoming session.

In currencies, the pound rallied to fresh long term highs around the 1.4000 psychological level last time seen 34 months ago. GBPUSD shrugged of weak UK retail sales (-8,2% in January) and rose amid the descent of the dollar, which is suffering profit-taking while a pickup in the US bond yields did little to impress the USD bulls. Now, US PMIs and news about President Joe Biden's stimulus plan is awaited.

EURUSD extended the recovery following a break above the 20-DMA, advancing for the second session in a row on Friday on the back of the continuation of the corrective downside in the greenback. The common currency derives extra support from the positive preliminary prints from manufacturing PMIs in the Eurozone for the month of February. The pair now needs to overcome the 1.2150 intermediate resistance on the way towards the 1.2200 barrier.

In commodities, oil prices were rejected from more than one-year highs around $65.50 seen yesterday. Today, the prices extend the downside correction, falling despite a sharp drop in United States crude inventories, as market participants take profits following the rally triggered by a cold snap in the largest US energy-producing state.

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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