The reemerged global trade concerns have put European stocks under pressure on Thursday following a brief relief yesterday. Investors also refrain from buying ahead of EU summit in Brussels, where European leaders will have to address the migration issue in Germany, Brexit development and European reforms. Meanwhile, consumer confidence and sentiment data in the euro zone and Germany came out mixed and haven’t affected investor sentiment. As such, Britain’s FTSE 100 loses 0.42 per cent to 7,589, France’s CAC 40 sheds 0.80 per cent to 5,284, while German DAX 30 declines by 1.39 per cent to 12,176. US stock index futures edge higher before the opening bell.
The greenback gave up some gains made earlier in the day. Mixed US economic data failed to affect the buck much. Moreover, the currency resumed the ascent after a pause. The third estimate of Q1 growth came out at 2.0% vs. the second estimate of 2.2%, while GDP price index rose by 2.2% vs. +1.9% expected. In the broader picture, the dollar continues to benefit from trade jitters against the European currencies, while receiving additional support from the monetary policy divergence. Half-year-end flows also play into the USD’s hands. However, should the US Treasury yields fail to resume the sustainable rise down the road and trade-war worries abate, the buck will likely have to face some profit taking within the bullish trend.
EURUSD managed to stage a corrective rebound from the 1.1523 area which acted as local support ahead of the psychological 1.15 level. Nevertheless, despite the mainly dismal economic figures from the US, the pair fails to get back above the 1.16 hurdle, which confirms the general euro weakness against the backdrop of migration issues in Germany, lingering political risks in Italy, and dovish ECB stance. From the technical point of view, EURUSD needs to regain the mentioned barrier to target the 20-DMA at 1.1670 again. As long as the price remains below this area, downside risks prevail.
GBPUSD loses ground for a third day in a row. On Thursday, the pair refreshed 2018 lows around 1.3050 after a break below the important 1.31 mark. The pressure on the sterling comes from risk-off environment, the remaining Brexit issues (including the still unresolved Irish boarder issue) which came back into focus ahead of the EU summit, as well as from the inconsistent BoE stance. The short-term picture point to strong downside risks, with the pressure has intensified following the Ireland PM comments as he highlighted the need of preparations for Britain crashing out of EU with no deal.
USDJPY has been consolidating in a rather limited intraday range, with the 200-hour SMA serves as support. The dollar continues to fight for the 110.00 mark, but the mission is difficult to complete against the backdrop of trade-war worries fuelling demand for the safe haven Japanese yen. As long as global trade issues remain in focus in the financial markets, the pair will continue to struggle, despite the overall USD bullishness. The price needs a daily close above the 110.00 mark to proceed with bullish attempts ahead of the weekend. So far, the current dynamics looks unsustainable in terms of dollar strength.
Brent crude received a boost yesterday from the positive EIA data which pointed to a decline in US crude oil inventories by almost 10 million barrels last week, while production levels stood at 10.9 million bpd for a second week in a row. The good figures from the US added to the upside pressure and sent the price to fresh June highs marginally below the $78 figure. On Thursday, the barrel shows signs of losing the upside momentum, though a mild bullish bias remains on the daily charts. Technically, the longer Brent remains below $78, the higher the risk of a correction amid profit taking. The intraday low comes at $77 – a break below could trigger a deeper retreat. But as the fundamental picture in the oil market remains bullish, corrections will likely serve as fresh buying opportunities for bulls as undersupply concerns still linger in the industry.