Macro economics

Analytics on 30/07/2020. Stocks and oil vulnerable, greenback in a recovery mode

European stocks traded lower on Thursday, extending losses to three-week lows as concerns about a sluggish economic recovery continue to mount after dismal economic data. According to the preliminary report, the German economy contracted 10.1% in the second quarter when compared to the expectations of -9.0% and -2.0% seen in the previous quarter, while the yearly rate plummeted by 11.7% against the previous reading of -1.9%. The unemployment rate in Germany came in at 6.4% in July versus 6.5% expected and 6.4% last. The unemployment change stood at -18,000 versus +43,000 expectations.

Elsewhere, Liu Xiaoming, Chinese ambassador to the UK, said that he regrets their relationship with the UK has run into a series of difficulties. He also added that the UK should take full responsibility for those difficulties, and highlighted that some British politicians clamor for a new cold war with China. Those comments added to the negative pressure surrounding the UK stocks.

Against this backdrop, the UK’s FTSE 100 sheds 2.02 percent to 6,004. Italy’s FTSE MIB edges lower by 2.86 percent to 19,311, France’s CAC 40 loses 1.40 percent to 4,889, while German DAX 30 declines by 2.55 percent to 12,494. U.S. stock index futures dropped and the Treasuries gained a slew of earnings from American tech giants and the upcoming economic data. The key report from the US will likely to show the biggest contraction gross domestic product in records.

In currencies, the dollar is making recovery attempts following another sell-off witnessed yesterday after the Federal Reserve left momentary policy unchanged and reiterated its readiness to do everything possible to support the economy that struggles amid the coronavirus crisis. EURUSD rallied on Wednesday evening to the 1.18 handle and attracted some profit-taking at fresh two-year highs. However, after a brief dip to intraday lows around 1.1730, the common currency has settled around 1.1750, refraining from a deeper correction as the dollar remains broadly weak.

Oil prices turned negative on Thursday after a modest climb seen yesterday in the aftermath of the EIA data that pointed to a contraction in crude oil inventories by over 10 million barrels last week. The release failed to inspire bulls as gasoline and distillate stockpiles rose, damping traders’ optimism. In general, Brent remains vulnerable and could see deeper losses if Brent fails to make a decisive break above the $44 handle any time soon.

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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