Macro economics

Analytics on 30.07.2021. Markets finish the week on a downbeat note

Wall Street bounced to finish higher overnight due to solid economic data and upbeat corporate results. The U.S. economy grew at a solid 6.5% annual rate in the second quarter to return to pre-pandemic levels while claims for unemployment benefits dropped by 24,000 to 400,000 last week. Meanwhile, Asian shares resumed the decline ahead of the weekend amid the resurgent pandemic-related worries.

In Europe, equities opened in the negative territory as well, with corporate earnings continuing to take center stage in the region. BNP Paribas reported a 26% rise in net income in the second quarter. Strong results allowed the bank to pay an additional dividend. Renault posted a half-year net profit that sharply improved on a yearly basis. The company also said it expected to post a full-year 2021 profit.

On the data front, the Eurozone economy rebounded 2.0% in the second quarter, beating 1.5% expected and -0.3% prior. On an annualized basis, the GDP expanded by 13.7% versus -1.3% in the first quarter of 2021 while beating 13.2% expectations. Eurozone's unemployment rate arrived at 7.7% in June when compared to May’s 7.9%. Meanwhile, the annual CPI came in at 2.2% in July, outpacing expectations of 2.0%. The core inflation eased to 0.7% YoY when compared to 0.8% expectations.

Against this backdrop, the UK FTSE 100 sheds 0.77% to 7,023, Italy’s FTSE MIB loses 0.28% to 25,444, France’s CAC 40 declines by 0.12% to 6,626, while the German DAX 30 gives up 0.82% to 15,512. U.S. stock index futures point to a lower open ahead of economic updates.

In currencies, dollar lacks demand despite the resurgent risk aversion that sent global financial markets lower across the board. As such, the he euro has been climbing north for the fifth day in a row on Friday to notch one-month highs above the 1.1900 figure during the European hours.

Upbeat economic data out of the Eurozone added to an upbeat tone surrounding the common currency. However, market sentiment could change if the US data comes in better-than-expected later in the day. Traders now look forward to the release of the core PCE price index along with consumer sentiment data. If the figures exceed forecasts, dollar demand could reemerge and thus send the euro lower on a daily closing basis.

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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