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Thursday 29th June: European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei up 0.55 %, Shanghai Composite gained 0.20 %, Hang Seng rose 0.75 %, ASX 200 rallied 0.80 %
  • Commodities: Gold at $1253 (+0.30 %), Silver at $16.83 (+0.60 %), WTI Oil at $44.95 (+0.50 %), Brent Oil at $47.70 (+0.35 %)
  • Rates: US 10-year yield at 2.23, UK 10-year yield at 1.16, German 10-year yield at 0.37

News & Data

  • Japan Retail Sales 2.0 % vs 2.6 % expected
  • Australia HIA New Home Sales 1.1 % vs 0.8 % previous
  • New Zealand ANZ Business Confidence 24.8 vs 14.9 previous
  • New Zealand NBNZ Activity 42.8 % vs 38.3 % previous
  • Dollar upended by rates reversal, stocks unfazed for now

Markets Update:

The US Dollar weakened across the board following hawkish comments from ECB President Draghi, Bank of England Governor Carney and Bank of Canada Governor Poloz. All of them were speaking at a panel organized by the ECB.

Draghi showed some caution, but noted that deflationary forces had been replaced by reflationary ones. EUR/USD declined sharply after ECB sources said that Draghi has been misinterpreted. However, the pair quickly recovered those losses and eventually broke above 1.14. In the short-term, EUR/USD looks a tad overbought, but the outlook remains positive.

BoE Governor Carney surprised markets with his hawkish comments, especially since he said last week that he doesn’t see the central bank hiking rates in the near-term. GBP/USD rallied to almost 1.2980. Heavy resistance is seen ahead of 1.30. Should the pair break above that level, a test of 1.31 is likely.

The Bank of Canada has also started to signal that a change in monetary policy might occur soon. USD/CAD has already been under a lot of pressure in the past weeks, and the recent optimistic comments increased that even more. The pair reached 1.3020 in Asia, and test of 1.30 support seems almost certain. Sub-1.30, support lies at 1.2960 and then at 1.2820.

Today, the main events will be German inflation data and US GDP numbers.

Upcoming Events:

  • 10:00 BST – Euro Zone Consumer Confidence
  • 13:00 BST – German CPI
  • 13:30 BST – US GDP
  • 13:30 BST – US Initial Jobless Claims
  • 23:45 BST – New Zealand Building Consents

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