Macro economics

Analytics on 13/07/2020. Stocks cautiously upbeat, oil struggles ahead of the OPEC+ meeting

As investors are shifting focus to the earnings season, European equities climbed higher on Monday despite the backdrop of rising coronavirus cases in some parts of the world. The U.S. has reported more than 60,000 new cases daily for three days in a row now. Furthermore, the World Health Organization reported a record daily rise in global coronavirus cases Sunday. As for earnings, major banks including Citigroup, JPMorgan Chase, and Wells Fargo are due to report their results on Tuesday.

Against this backdrop, the UK’s FTSE 100 gains 0.98 percent to 6,155. Italy’s FTSE MIB edges higher by 0.38 percent to 19,843, France’s CAC 40 adds 0.81 percent to 5,010, while German DAX 30 rises by 0.97 percent to 12,756. U.S. stock index futures are edging higher as investors shrug off negative developments on the coronavirus front.

In currencies, EURUSD extends its upside correction from the 1.1250 region but struggles to overcome the 1.1340 local resistance as trading volumes are muted at the start of the week. As such, the euro remains shy of July highs registered last week around 1.1370. Moreover, the pair is yet to confirm a recovery above the 1.13 handle on a daily closing basis. This week, the EU leaders are meeting to discuss establishing a European recovery fund. The ECB monetary policy meeting due on Thursday could affect dynamics in the pair as well. Positive comments from both fronts may push the common currency higher while coronavirus concerns will likely continue to cap the upside potential in the pair due to the safe-haven status of the US dollar.

Meanwhile, oil prices are marginally lower on Monday after failed attempts to get back above the $53 handle. Oil traders are shifting focus to the OPEC+ meeting that will set the further tone to prices. The meeting is expected to recommend an easing in the curb on oil production which would be negative for the futures as the market remains fragile and vulnerable to downside risks from the economic and coronavirus front. A record number of new coronavirus cases in the US state of Florida weakens the oil demand outlook, putting Brent under the selling pressure today. In other news, Baker Hughes reported on Friday that the number of oil rigs in the US fell by 4 to 181 for the week ending July 10.

Gold prices resumed the ascent on Monday after two days of losses late last week. The bullion climbed back above the $1,800 handle but stays shy of the recent long-term highs registered last week around $1,818. However, the safe-haven gold demand could pick up in the days to come should investor sentiment turn sour. At the same time, upbeat statements from the EU summit and the ECB meeting as well as positive economic data out of China could cap the upside potential in the market.

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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