Europe Points Lower On Mixed Chinese Data, Post Impressive US Jobs

Astonishing US jobs market data was offering support, whilst a mixed picture over China’s economic recovery from covid-19 dragged on broader sentiment.

Charts (6)

After a phenomenal week last week which saw European bourses charge higher, markets were looking a little more subdued ahead of the London open. On the one hand the astonishing US jobs market data was offering support, whilst on the other, a mixed picture over China’s economic recovery from covid-19 dragged on broader sentiment.

Exports from China contracted -3.3% yoy in May, well above the -7% contraction forecast and an improvement on April’s -3.5%. Imports, however, shrunk a much larger than expected -16.7%, worse than April’s -14.2% drop and the -9.7%decline forecast. The data shows that whilst domestic demand is starting to slowly pick up after the coronavirus lockdown, the global recovery is still a long way from showing signs of improvement.

The data comes following US statistics on Friday which astounded the markets. 2.5 million jobs were created in May, obliterating expectations of -8 million job losses. US futures are looking to extend gains, whilst the safe haven US Dollar is once again on the back foot, following losses of 1.4% across the previous week. Traders will look ahead to the Fed’s monetary policy announcement on Wednesday for further clues as 

UK travel quarantine
The UK pressing ahead with two-week quarantine measures on international arrivals is set to dampen the mood on the FTSE. The move is expected to devastate tourism, wrecking the chances of summer holiday plans reviving a sector which is already on its knees. The move effectively pours cold water on any hopes of reigniting the sector after the virus induced slump. 
On the economic calendar, there is no high impacting data from US or UK today.

EUR below $1.13 after weak German data
EUR has slipped back through $1.13 consolidating gains from the previous week, which saw the common currency gain 1.7% across the week and hit a 3-month high. German industrial production plunged by a wider than forecast -17.9% in April, highlighting the damage that covid-19 caused whilst adding pressure to the common currency.  Attention will now turn to Eurozone sentiment data which is expected to show that morale slipped again in June. Christine Lagarde is also set to testify.

OPEC agrees to extend record output cuts
Oil struck a 3-month high overnight after OPEC+ announced that it would extend its current production cut deal, following a meeting on Saturday. The 9.7 million bpd output cut will be extended for at least another month. Whilst most countries taking part n the deal were willing to continue, poor compliance from some counties was causing discontent within the group. 
Oil prices have effectively doubled across the month of May as OPEC+ regulates the supply side and reopening of economies boosts demand. However, prices haven’t ripped higher at the start of the week because the move was, too an extent already priced in. Oil is currently hovering around $40 pb mark, a 3-month high.

FTSE Chart


More from Indices

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.