KBC Market Research Desk
KBC Bank
Global sentiment improved as yesterday's session developed, easing the bid for the dollar. Eco data again only played a secondary role. The dollar traded strong early in Europe with the TW dollar (DXY) touching 97.60. EUR/USD filled bid below 1.12 even as EMU PMIs and German labour and retail data beat expectations. A rise in core EMU yields initially also didn't help the euro. The dollar turn south in US dealings. Positive test results for a new corona vaccine and a solid US manufacturing ISM (52.6 from 43.1) supported an equity rebound. EUR/USD even closed with a modest gain (1.1251 from 1.1234). USD/JPY didn't profit from the risk-on and mainly followed the broader USD decline (close at 107.47).
This morning, Asian equities join the risk rally from WS despite rising tensions between China and the US on the implementation of the National security law in Hong Kong and a record rise in new infections in the US. EUR/USD extends gains (1.1265 area). USD/JPY stabilizes (107.50 area) but again doesn't profit from the risk-on. The yuan (USD/CNY 7.0675) hardly profits from yesterday USD decline even as the PBOC put the daily fix rather strong. AUD/USD regained the 0.69 barrier, with recent top levels still with reach (AUD resilience).
Today's focus is on the US payrolls. The report will be released today as US markets are closed for the 4th of July tomorrow. Job growth is expected to recover by 3.058 mln after last month's surprise gain of 2.5 mln. There are probably statistical issues in play that might complicate the outcome, but the consensus estimate looks reasonable. Yesterday, the dollar declined further after a strong ISM due to the positive risk-off. This might still be the case with a constructive payrolls report. EUR/USD settled in a ST consolidation pattern near 1.12. The picture turned a bit more fragile but the 1.12/1.1160 support proved quite solid and this was confirmed yesterday. We look for confirmation on an EUR/USD bottoming out process. A break above 1.1288 would give some comfort with 1.1349 next reference on the charts.
Sterling further reversed the sharp loss against the euro earlier this week. EUR/GBP drifted further south in the 0.90 big figure. The move was mainly technical in nature, but was also supported by rebound in UK yields. There are no UK data today. Headlines on the process of the Brexit talks again show little progress. We expect the sterling rebound to slow with EUR/GBP 0.90 area a first technical support.
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
Recommended Content
Editors’ Picks
EUR/USD consolidates recovery below 1.0700 amid upbeat mood
EUR/USD is consolidating its recovery but remains below 1.0700 in early Europe on Thursday. The US Dollar holds its corrective decline amid a stabilizing market mood, despite looming Middle East geopolitical risks. Speeches from ECB and Fed officials remain on tap.
GBP/USD advances toward 1.2500 on weaker US Dollar
GBP/USD is extending recovery gains toward 1.2500 in the European morning on Thursday. The pair stays supported by a sustained US Dollar weakness alongside the US Treasury bond yields. Risk appetite also underpins the higher-yielding currency pair. ahead of mid-tier US data and Fedspeak.
Gold appears a ‘buy-the-dips’ trade on simmering Israel-Iran tensions
Gold price attempts another run to reclaim $2,400 amid looming geopolitical risks. US Dollar pulls back with Treasury yields despite hawkish Fedspeak, as risk appetite returns. Gold confirmed a symmetrical triangle breakdown on 4H but defends 50-SMA support.
Manta Network price braces for volatility as $44 million worth of MANTA is due to flood markets
Manta Network price was not spared from the broader market crash instigated by a weakness in the Bitcoin market. While analysts call a bottoming out in the BTC price, the Web3 modular ecosystem token could suffer further impact.
Investors hunkering down
Amidst a relentless cautionary deluge of commentary from global financial leaders gathered at the International Monetary Fund and World Bank Spring meetings in Washington, investors appear to be taking a hiatus after witnessing significant market movements in recent weeks.