Macro economics

Analytics on 29/04/2019. Dollar, oil steadied after a plunge

European stocks are lower on Monday, as investors are digesting weak euro zone data that fueled concerns over the outlook for the global economy. According to the official report, economic sentiment in the region declined for a tenth consecutive month in April and registered the lowest reading in more than two years. Sentiment slipped to 104.0 from 105.6 in the previous month. In other news, S&P Global affirmed Italy’s credit rating at BBB on Friday and gave more time for Rome’s government to implement policies to address the country’s economic woes. Banking sector has cheered the news but investor behavior remains cautious in general.

Against this backdrop, Britain’s FTSE 100 sheds 0.09% to 7,421, France’s CAC 40 is down 0.30 percent to 5,552, while German DAX 30 declined by 0.32 per cent to 12,275. US stock index futures are looking mixed ahead of the official opening, as investors are preparing for another day of corporate earnings.

The greenback is mixed against major counterparts. EURUSD keeps the bullish bias after Friday’s dollar retreat following weak details of the US GDP report. The pair, however, struggles to challenge the 1.1170 region as mixed euro zone data cap gains in the common currency, apart from political uncertainty in Spain. Positive money supply data was negated by a decline in the bloc’s economic sentiment and confidence gauges.

Euro zone economic sentiment dipped for the 10th consecutive month to its lowest level in more than two years in April. Sentiment slipped to 104.0 points in April from 105.6 in March, marking the lowest level since September 2016. Sentiment in industry fell for a fifth consecutive month to -4.1 points in April from -1.6 points in March, well below market expectations of -2.0. Sentiment in services, meanwhile, was unchanged at 11.5 points in April, against expectations of a dip to 11.1. The mood of consumers declined to -7.9 points in April from -7.2 in March. As the dollar remains relatively steady and shifts focus to the upcoming FOMC meeting, the pair’s upside potential will likely remain limited in the short term.

Brent crude struggles to regain the bullish momentum after a plunge on Friday. The aggressive profit-taking was due to Trump’s comments. The US leader said he has spoken with OPEC and demanded they bring prices down. The market reaction was dramatized by the fact that prices were close to the recent highs, which made Brent attractive for profit-taking.

Meanwhile, Baker Hughes on Friday reported that the number of active U.S. rigs drilling for oil fell by 20 to 805 this week. U.S. oil drillers this week cut the most rigs since the week to Jan. 18. That followed a decline of eight the previous week. Today. Brent is making some recovery attempts and has settled above the $71 handle. A daily close above the $71.50 area is needed for the downside pressure to ease partially.

Nathan Lambert, Head of Global FX Analytical Department

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Interest rates

Country Rate Value
USA Federal Funds 2,50 %
Switzerland 3 Month LIBOR Range -0,73 %
United Kingdom Repo Rate 0,75 %
EU Refinancing Tender 0,00 %
Japan Overnight Call Rate -0,10 %
New Zealand Official Cash Rate 1,5 %
Australia Cash Rate 1 %
Canada Overnight Rate Target 1,75 %
All rates

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