Macro economics

Analytics on 10/07/2020. Stocks lick wounds, dollar wavers, oil on the defensive on Friday

European stocks opened lower but turned marginally positive as investors focused on some upbeat corporate news in an effort to shrug off the rising number of coronavirus cases globally. Like on Wall Street, European tech shares are leading the gains, helping the Stoxx Europe 600 Index erase earlier losses after Apple chipmaker TSMC posted revenue above estimates for the second quarter. Taiwan Semiconductor Manufacturing Co. reported a new company high for June sales amid solid demand for emerging technologies including 5G applications and high-performance computing devices.

Elsewhere, in a sign of a further rise in tensions, China said that it will take countermeasures over US sanctions on the Xinjiang issue. Japan highlighted that the situation in Tokyo doesn't call for a state of emergency declaration. In other news, German chancellor Merkel is scheduled to meet with Spanish PM Sanchez for talks next Tuesday in a preparation for the summit that will take place on 17-18 July.

Against this backdrop, the UK’s FTSE 100 sheds 0.56 percent to 6,121. Italy’s FTSE MIB edges lower by 0.73 percent to 19,753, France’s CAC 40 loses just 0.03 percent to 4,979, while German DAX 30 rises by 1.15 percent to 12,638. U.S. stock index futures pared earlier losses and turned green as well.

The dollar remains mixed at the end of the trading week amid conflicting signals in the global markets. The Japanese yen is the strongest among major currencies amid the prevailing risk aversion. USDJPY plunged below the 107.00 handle and dipped to nearly two-week lows around 106.70. EURUSD bounced from local lows around 1.1250 but still lacks the upside momentum to regain the 1.13 handle which is the key obstacle for bulls again. A daily close above this level will somehow improve the short-term technical picture for the common currency.

Oil prices remain under the selling pressure following a retreat from the $43.50 area seen yesterday. Brent crude extended recent losses to the $41.30 region and stays on the defensive as traders prefer to take profit ahead of the weekend, citing risk factors ranging from the pandemic to the outlook for the global energy demand recovery. In its monthly report, the IEA warned that oil demand recovery is at risk from coronavirus resurgence. At the same time, the agency raised the 2020 oil demand forecast by 400k barrels per day to 92.1 million barrels per day. However, it did little to ease the negative pressure surrounding Brent.

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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