Monex: Optimisme op markten neemt af, EUR/USD onder druk
Hieronder volgt een commentaar in het Engels van Ranko Berich, Head of Research bij Monex Europe op de Amerikaanse dollar, euro en het Britse pond.
The euro lost its footing against the dollar this morning after reaching a 9-day high in yesterday’s risk-on session which saw a rally in US stocks and fall in Treasuries. An overnight statement from Italian Prime Minister Giuseppe Conte’s cabinet included plans to expand public investment, focusing on boosting growth and put pressure on Italy’s crippling debt-to-GDP ratio. The statement also included new spending on education and moves to boost private investment. State investment will surge above 3% of GDP over the next four years compared to 2.3% in 2019. The nation’s new investment plan considers grants and loans from the EU recovery fund that is still to be approved and will be discussed by the EU leaders at a summit on July 17-18. This morning, German industrial production rose by only 7.8% in May compared to the expected 11.1% increase and up from -17.9% in April. The big jump in output compared to the prior reading is only natural in the context of most of the eurozone being in lockdown throughout April which led markets to have higher expectations for today’s output data. The fall of the shared currency is likely related to broad-based US dollar recovery rather than this morning’s data release as similar movements can be seen across the G10 following a deterioration of global risk sentiment. The euro wasn’t helped in this increasingly risk-averse climate by the release of fresh European Commission GDP forecasts. The commission lowered its forecast for EU GDP from -7.4% to -8.3%, while also lowering its forecasted rebound in 2021 from 6.1% to 5.8%. The commission said its calculations worsened due to contaminant measures being lifted more gradually than previously expected. With the rest of the day being light on the eurozone data front, the euro’s price action further relies on developments in risk appetite today.
The dollar has finally managed to catch a bid this morning, after trading on the back foot against most major peers more often than not over the past week. The greenback’s strength coincided with yesterday’s global equities rally faltering in European markets this morning, with China’s CSE the lone major market trading in the green. Raphael Bostic gave an interview to the Financial Times where he seemed to indicate a higher degree of caution about the US economic outlook than the consensus on the Federal Open Market Committee. The Atlanta Fed president warned that the recovery from Covid-19 may be levelling off, and would be “bumpier” than it otherwise might have been in light of certain recent developments. In light of Bostic’s comments and last week’s minutes from the latest FOMC meeting, the Fed seems highly likely to step up its easing in the near future, with enhanced forward guidance the most likely measure.
Sterling is trading in the red along with the whole G10 currency board this morning amid a rather empty data calendar in the UK. The deterioration in risk appetite is the main driver for sterling’s slump, while concerns about a no-deal Brexit and virus worries remain in play. UK Chancellor Rishi Sunak appears in parliament tomorrow to make an announcement on the government’s job support schemes and tax thresholds. The Times reported earlier that Sunak is considering plans to raise the property tax threshold while slashing value-added tax in pubs, restaurants and cafes in an effort to revive the economy and protect the millions of jobs in the hospitality sector.