Macro economics

Analytics on 27/06/2019. Investors nervous ahead of G20 summit, OPEC+ meeting

European equity markets are mostly lower on Thursday as investors are getting nervous amid contradictory signals ahead of a widely anticipated G20 summit, where the US-China trade talks are in focus. As such, Trump said Wednesday that a trade deal with Xi Jinping was possible at the G-20 summit in Osaka. At the same time, he warned that he was prepared to impose tariffs on all remaining Chinese imports if talks fall through. On the data front, the European Commission data revealed that confidence fell substantially in the bloc’s largest economies last month, with Germany and Italy drove the economic sentiment to its lowest point in three years. Meanwhile, Bank of England Governor Mark Carney said that the central bank would be more likely to cut interest rates in the event of a “no-deal” Brexit.

Against this backdrop, the UK’s FTSE 100 sheds 0.31 per cent to 7393, Italy’s FTSE MIB gains 0.26 per cent to 21,112, France’s CAC 40 loses 0.28 percent to 5,485, while German DAX 30 gains 0.06 per cent to 12,253. US stock index futures turned lower as investors continue to express concerns over a protracted trade war.

EURUSD tried to extend a bearish correction earlier on the day but received support around 1.1350 and turned positive on the day. However, the upside momentum is also limited, in part due to weak Eurozone data and the prevailing risk aversion ahead of major risk events due later this week. German inflation came in better than expected but failed to inspire euro bulls. Technically, the key support lies around 1.1340 while the immediate resistance comes at 1.1380 and then at 1.14.

Oil prices failed to challenge the $66 barrier yesterday and turned into a corrective mode on Thursday. The upside was limited by the $65.50 area earlier in the day as traders refrain from buying amid lingering doubts in the progress in US-China trade talks. Also, market participants are starting to shift focus on the upcoming OPEC+ meeting. By the way, the downside pressure will likely be limited as traders expect the group to extend the output cuts further. In the US, crude oil inventories fell 12.8 million barrels, more than the 2.5-million-barrel decrease analysts had expected, official data showed. But the positive market reaction to the report was short-lived as the G20 summit and OPEC+ meeting are in focus now.

Gold prices extend the retreat from six-year highs around $1,440 registered earlier this week. It looks like the precious metal is ready to challenge the $1,400 psychological level should the dollar demand rise in the short term. On the other hand, as investors refrain from risky trades ahead of the summit, the bearish potential for the bullion is limited at the moment.

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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