Eurozone
The business climate in Germany, according to CESIfo, declined in June to 101.8p against 102.3p a month earlier. The deterioration is observed in almost all components - in manufacturing, construction and services, especially noticeably the decline in the index in trade where companies revised estimates of the current situation, shifting towards pessimism for the first time since February 2015.
On Thursday, the indices of economic optimism and consumer confidence will be presented by Gfk and the European Commission. According to forecasts, they are ready to recognize some cooling of both the business climate and inflationary expectations.
The euro continues to experience pressure before the opening of the EU summit on June 28-29. The internal division of the EU countries is noticeably deepening in a number of key issues, such as immigration policy and the general budget or the transfer of the banking sector from the national to the European level.
On Friday, the euro can receive a positive impetus, which will smooth out political contradictions. Preliminary data on inflation in the eurozone will be published and a number of indirect indicators indicate that inflation will continue to grow. This is facilitated by the growth of wages in Germany and France by 2.7% and 2.0% respectively. The ECB, in its calculations, assumes productivity growth that will inevitably affect inflation in the coming years. Seasonal factors and oil prices continue to rise and the recent increase in the HISP indicator pushes up and general inflation expectations.
The nervous situation, connected with the introduction of tariffs on a number of goods from the United States as a retaliatory measure and the high probability of escalating trade wars, hinders the positive. All this can prevent the euro from starting recovery and will help increase demand for the dollar.
In the short term, corrective growth today is more likely. It is possible to try to gain a foothold above the resistance level of 1.1727 with a target at 1.1851.
United Kingdom
Politics is taking a back seat in the impact on the pound rate as the main talks on Brexit have been postponed to October. The forecast for the growth of the WoE rate is aimed at August after the unexpectedly hawkish position of some members of the Committee after a recent meeting.
Reducing tension contributes to the return of investment in the UK. The latest published balance of payments looks optimistic and the GDP and labor market forecasts are improving. The pound, against this background, has a chance to regain some of its positions. The pound will try to go above the level of 1.3314 but the achievement of 1.3470 is still in doubt and will not happen today.
Oil
Despite the fact that the OPEC + countries agreed with the pressure from a number of buyers, such as India and China, which declared their readiness to start the creation of oil-consuming countries in order to consolidate influence on producers, and increased the formal oil production by 1 million barrels per day by the end of the year, the situation still can not be called clear.
OPEC +, contrary to popular belief, does not at all seek to promote oil prices to meet its own interests. Its goal is to ensure that oil prices get rid of excessive volatility caused by speculation in financial markets and are established at a level profitable for both producers and buyers. In other words, OPEC + seeks to seize control over the price setting mechanism, and not simply to achieve a one-sided advantage.
Russian Energy Minister Novak announced that by the end of the year, the countries of OPEC + intend to enter into a new agreement. Obviously, the struggle for market control is far from over, and in these circumstances, it is unlikely that oil prices will decline from an increase in production, which in fact will be much less than announced.
The main support for Brent is at $ 72 per barrel, a possible decline in quotes will mean the activation of bulls, and not the interception of the initiative by the bears. The reasons for a deep correction of prices is, at the moment, there.
