Thursday passed relatively quietly, although the current date range significantly expanded, especially in European currencies. British data was not surprised and did not cause excitement: for the 1st quarter the growth rate already very few people care about. Much more emotions will cause the second half. As a result, the opening of the US session, GBP / USD is trading around 1.3420, and the EUR / USD – 1,11.
The picture is contradictory in the stock market since the third day in a row of growth in a “British chaos” show quite difficult. Brent holds below 50.50 dollars per barrel. Precious metals showed a mixed performance.
Chart of the week:
Economic data of the previous day:
- Eurozone: June, CPI + 0,1% against -0.1% in May
- United Kingdom:. Q1 GDP + 0.4%, + 2% in line with expectations
- Two European banks have not passed the Fed’s stress tests: Deutsche Bank Trust Corp. and Santander Holdings
Recently, the Japanese government met in emergency session to discuss the fall in Nikkei (NKD) and a sharp rise in the yen. This event passed almost unnoticed, because any radical steps announced were not. However, Prime Minister Abe reiterated his mantra that “is willing to do everything possible” to keep the economy in recovery mode. This means that the incentives they can still be solved, and work on curbing further growth of the Japanese currency will be. It is possible that all this will happen in the next month, so the medium-term horizon, it makes sense to buy the Nikkei (NKD). We recommend to wait for correction to the area of 15360 In the current environment, with the aim to 15770 and 15940 further.
Commodity and raw market
Brent lost support in the form of risk appetite and immediately stopped the move. It is difficult to move up in a still lower world demand for energy, as well as the uncertain situation in Europe – one of the major consumers of oil. If predictions about the sharp decline in growth in European countries come true, it could be a new obstacle to the growth of Brent. At the current time the main factor still remains the dynamics of the US dollar. There are signs that the US currency sales can be completed in the near future. Investment flows to the end of the quarter runs out on Friday, which means that some investors could easily return to dollar purchases. For dollar-denominated oil is detrimental and, therefore, it is possible movement in the area of 49.00 dollars per barrel in the next day.
There is correction GBP / USD in the last three days due not only to technical oversold currency, but also the end of the quarter. Traditional flows of portfolio rebalancing and adjusting the balance of the British pound helped grow up a bit. However, it would be after the funds will end up with the “decoration” of its quarterly? With the end of the quarter, investors with new force will start to sell GBP, and with a more attractive levels. Judge for yourself, there is no fundamental reason for growth: no chance that Britain will change his mind out of the EU no. There is only a question of timing. And if now is economic reports do not reflect the first results of the referendum, that from next month it makes sense to monitor the volume of mortgage lending, business activity and the dynamics of the labor market: each negative will release pressure on the GBP / USD. Thus, the current levels look attractive entry point for sales with the immediate goal at the level of 1.3270 and further to 1.3225.
Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.