Migration deal boosts EuroBy Vincent-Frédéric Mivelaz
The EUR/USD is rising, currently at 1.1630 and approaching 1.1666. The boost comes from yesterday’s European Union summit that decided to relocate refugees among member states, control the EU’s external borders, halt smugglers and possibly set up migrant centres. This fuelled the Euro and equities, too, with the Euro Stoxx 50, CAC 40 and DAX trading at +1.37%, +1.36% and +1.29% respectively. Our view of the EU is positive, as political uncertainties are nearing a lull. As for Brexit, the risk remains on UK side.
German inflation up againBy Vincent-Frédéric Mivelaz
For the second month running, inflation topped 2%, a positive signal for the German economy that remains worrisome after Q1 growth slid, and May retail sales declined. Growing energy prices and decreasing revenues from non-specialized stores, wholesale and related consumption markets (-0.70% month to month) and non-specialized stores (-3.50%) showed a strong decline in May disposable income, suggesting that 2018 growth may be under the expected 2%.
Summer risk-offBy Arnaud Masset
After three days of gains, the USD took a breather on Friday, as trade war worries receded. Equity investors are also enjoying the last trading day of the week: the Nikkei ended the day up 0.15%; Chinese stocks partially erased previous losses with the CSI rising 2.55%. Australian and New Zealand stocks were the exception as they fell 0.33% and 0.62% respectively. With central banks in the rear-view mirror, markets will pay more attention to political developments and trade tensions during the summer. It’s likely the market will remain in risk-off mode.