Macro economics

Analytics on 28/06/2019. Stocks marginally higher as G20 summit starts

Markets are trading in tight ranges as the crucial G20 summit looms. European stocks are cautiously higher on Friday, awaiting the outcome of US-China trade talks against the backdrop of a slowing global economy. Investors are nervous over whether the outcome of the Trump-Xi meeting will produce progress in ending the trade war. The sentiment was somehow dampened by the reports that Xi would give Trump a set of conditions to be met by the United States before reaching any settlement. There is still a threat that Washington may move ahead with further tariffs on Chinese goods after the weekend summit.

Against this backdrop, the UK’s FTSE 100 adds 0.33 per cent to 7426, Italy’s FTSE MIB gains 0.26 per cent to 21,164, France’s CAC 40 rises by 0.30 percent to 5,509, while German DAX 30 gains 0.43 per cent to 12,324. US stock index futures are climbing higher but in a cautious manner as well.

The greenback turned lower against the majors on Friday. EURUSD is climbing back to the 1.14 handle after strong economic data from the euro zone, which coupled with a modest pullback in USD lifted sentiment towards the common currency. Eurostat’s flash reading of euro zone CPI report showed that the annual reading came in at 1.2% in June, matching expectations of 1.2% and unchanged from 1.2% previous. The core figure rises to 1.1% in the reported month when compared to 1.0% expectations and 0.8% previous. Yesterday, the report showed that the German consumer price inflation accelerated by 1.3% and remained well below the European Central Bank’s rate target of just under 2 percent for the region as a whole.

Technically, as long as the pair holds above the 200-DMA around 1.1345, the short-term outlook remains positive. However, the euro will hardly be able to make a decisive break above the 1.14 barrier any time soon as traders are cautiously awaiting news from the summit.

In commodities, Brent turned marginally positive on the day after a dip to $65.20. The barrel still struggles to overcome the $66 barrier as traders continue to express concerns over the potential lack of progress in the US-China trade talks. On the other hand, the market is now supported by expectations that OPEC+ will extend an output cut agreement early next week. In the short-term, the prices will likely continue the current consolidation in a limited range. Awaiting signals from Japan, where the G20 summit starts.

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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