Macro economics

Analytics on 17/07/2020. Stocks mixed, oil struggles to regain upside momentum

Shares in Europe are fluctuating on Friday amid uncertainty ahead of the EU summit, with banking stocks leading the losses, offsetting gains for carmakers and tech shares. In recent comments, Germany's Merkel noted that she can't say if they will find a compromise this time as the differences are very big.

Elsewhere, Japan reaffirmed no need for a state of emergency declaration at this point. In its latest survey of professional forecasters, the ECB economists see Eurozone GDP contracting by 83% this year versus the previous estimate of -5.5%. On the data front, Eurozone May construction output rose by 27.9% versus -14.6% m/m prior while final CPI for June arrived at +0.3% versus the preliminary estimate of +0.3% y/y. meanwhile, BOE's Bailey said that financial markets indicate interest rates will stay very low.

Against this backdrop, the UK’s FTSE 100 gains 0.50 percent to 6,282. Italy’s FTSE MIB edges higher by just 0.05 percent to 20,365, France’s CAC 40 loses 0.11 percent to 5,079, while German DAX 30 rises by 0.50 percent to 12,935. U.S. stock index futures are little changed ahead of US consumer sentiment data due later today.

In currencies, the euro turned higher and regained the 1.14 handle on Friday. EURUSD climbed to the 1.1430 area, staying shy of recent tops around 1.1450. The common currency needs an additional catalyst to challenge this local resistance. Upbeat developments on the EU summit front could send the euro higher but downside risks persist as well. Positive economic data out of the Eurozone gave a lift to the euro, with a weaker dollar adding to its bullishness.

Oil prices are little changed around the $43 handle today. Brent crude declined slightly on Thursday and retains a bearish bias, struggling to extend the ascent due to a lack of positive drivers. The $44 handle continues to act as a strong resistance that has been deterring bulls since early June. In the short-term, the futures need to cling to the $43 level in order to avoid a deeper retreat.

Gold prices declined decently yesterday and even finished the day below the $1,800 figure. Today, the bullion resumed the ascent but the recovery momentum looks limited. On the one hand, the safe-haven precious metal derives support from the lingering uncertainty and concerns over the pandemic, US-China tensions, economic recovery, etc. On the other hand, the upside pressure is limited due to overbought conditions and hopes for the European recovery fund and other measures from major governments and central banks.

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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