European equity markets closed up on Tuesday, partly as a consequence of Germany’s latest IFO readings for: business assessment, climate and expectations, coming in ahead of forecasts. Import prices came in below expectations at a -1.1% increase month on month, ensuring that Germany’s manufacturing costs will be (temporarily or otherwise) cheaper. Other European economic calendar news concerned the UK’s CBI: optimism, sales prices and orders surveys, with both sales prices and orders shrinking significantly, month on month, in July. The U.K. did receive a boost in the form of BMW, who have provisionally committed to continue their production of their new electric version of the Mini car, in the already established Oxford, England factory.
The FTSE closed up 0.77%, STOXX 50 up 0.59%, DAX up 0.45% and CAC up 0.65%. Sterling enjoyed modest gains versus its main peers on Tuesday; GBP/USD rose by circa 0.4% to reach a high of 1.3081, to end the day up circa 0.2% at 1.3029. GBP/CHF and GBP/JPY made gains, both pairs pushing through R2, to end the day close to the daily highs. EUR/USD rose by circa 0.1% to 1.1644, after breaching R2 and reaching an intraday two year high of 1.1712. Similar to sterling the euro also made healthy gains versus the Swissie and yen, both currencies fell sharply versus their main peers; USD/CHF rising through R3 by circa 1%, to end the trading day at circa 0.9521.
USA economic calendar news on Tuesday saw the conference board consumer confidence index rise to 121.1, beating the forecast of 116.5. The house price index missed the prediction by only rising 0.4% in May, whilst the Case Shiller composite 20 (USA city) index fell back marginally, rising by 0.1% in May and reducing to a YoY rise of 5.69%. The Richmond Fed manufacturing index for July came in at 14, significantly ahead of the forecast of 7.
All things considered a mood of optimism enveloped USA equity investors; with the FOMC two day interest rate and policy meeting beginning with the interest rate decision, to be announced on Wednesday. The SPX and DJIA ended the day at record highs, DJIA up 0.46% and SPX up 0.30% with the tech heavy NASDAQ closing flat on the day after Alphabet (Google) provided disappointing figures, which included the record fine the European Union imposed on the firm, for unfair business practice.
USD/JPY breached R2, ending the day up circa 0.5% on the day at 111.76, WTI oil rose by circa 3.5% on the day at $47.92, the largest single day rise in over three weeks, as further commitments by the Saudis for production cuts, caused a surge in long bets. Gold fell by approx. 0.5% to $1250.
Economic calendar events for July 26th, all times quoted are London (GMT) time
08:30, currency impacted GBP. Gross Domestic Product (QoQ) (2Q A). The forecast is for a marginal rise to 0.3%, from the 0.2% growth recorded in Q1.
08:30, currency impacted GBP. Gross Domestic Product (YoY) (2Q A). With GDP falling to 0.2% in Q1 and a low expectation for Q2, YoY GDP growth is forecast to fall to 1.7%, from 2.0%.
14:00, currency impacted USD. New Home Sales (MoM) (Jun). New home sales are predicted to fall to 0.8% in June, from the 2.9% growth registered in May.
14:30, currency impacted USD. DOE U.S. Crude Oil Inventories (Jul 21). The forecast is for a fall to -3100k, from the -4727k fall registered in the prior week.
18:00, currency impacted USD. Federal Open Market Committee Rate Decision (Jul 26). The general consensus amongst the economists polled, is for the FOMC to agree to maintain the main interest rate, at the current rate of 1.25%.
