- Equity Markets Lacking Direction
- EUR/USD in the crossfire of ECB Back and Forth
- OPEC Sources Prompt Oil Lift
QUICK TAKE: EUR/USD Chops on ECB Confusion, Oil Jumps on OPEC Sources
Equities: Heading into the Wall Street open equity markets have begun to drift lower with US 10yr yields hitting session highs of 1.48%. The overall direction remains relatively mixed with Monday’s gain slowly being chipped away. Soft ADP employment data (117k vs 177k exp.) hasn’t helped proceedings, however, it is important to note that the ADP is not exactly the best indicator for NFP, having overstated jobs gains by 125k last month.
Euro Stoxx 50 Sector Breakdown
Outperformers: Financials (1.2%), Consumer Discretionary (1.2%), Energy (0.7%)
Laggards: Utilities (-2.2%), Healthcare (-1%),Technology (-0.2%)
Intra-day FX Performance
EUR: The ECB have a strange way of communicating to markets with the current back and forth, in which the differing opinions on the GC will likely come to light at next week’s ECB meeting. In recent days, ECB members on the whole have talked up increasing the pace of bond purchases to stem the rise in nominal bond yields, in which ECB’s Panetta stated that unwarranted tightening will not be tolerated. However, 24hours later and ECB sources note that there is no need for drastic action to curb bond yields. Subsequently, giving the Euro a slight pop above 1.21. For now, the Euro remains relatively choppy and will likely remain the case until Chair Powell speaks tomorrow.
of clients are net long.
of clients are net short.
GBP: The Pound saw little in the way of a reaction to the UK Chancellor’s budget announcement. In part, this is due to the fact that the majority of the budget had been pre-announced as is often the case and thus providing no real surprises for the Pound. That said, the message is clear from the Chancellor, this is a pro-growth budget and thus fiscal measures will continue to underpin GBP going forward.
Commodities: Oil prices are slightly firmer, following source reports that OPEC+ has oil production rollover among options for tomorrow’s meeting, in which several OPEC+ members support the idea. However, it is important to point out that it is Saudi who holds the cards and what they will do with their additional 1mbpd cut, which is set to expire at the end of the month. In recent weeks, oil prices have risen substantially and thus it is my expectation that OPEC will look to boost production, it is just a question of how much. That said, in light of these recent source reports, it does raise the short term negative reaction to such an outcome.
Looking ahead: DailyFX Calendar