EU Market Review 7th July 2021

by Charalambos Constantinides

USDZAR is consolidating the last two weeks as it is moving between the horizontals 50- and 100-period simple moving averages after the rebound from the steep downtrend line on June 7th, 2021. However, the MA50 is still moving below the MA100 since the July 13th, 2021, indicating a bearish tendency. The MACD Oscillator is in bullish territory with the MACD signal above the MACD line and both are sloping upwards indicating a bullish tendency. The price is now at 14.35 attempting to penetrate the MA100 upwards, where there is strong resistance.
For the bulls, important resistance point exists initially at 14.3500 where the MA100 resides now and is close to the 50% Fibonacci retracement level adding strength to that level, also at 15.10 where the March 26th top can be observed, and finally at 15.5705 from the March 9th top of the last downward move.
For the bears, important support point exists initially at 14.00 where the MA50 lies now flat, also at 13.37 from the June 7th bottom of the last downward move and finally at the 13.07 inside support bottom from July 31st 2018.

After disappointing data from the Eurozone on Tuesday, the major US economies back in the spotlight. Stats from Germany, France, Italy and the UK are expected to provide direction.
• European stocks retreated sharply from two-week highs on Tuesday, breaking a three-day winning streak as investors flocked to bonds on worries over risks to rebounding global economic growth.
All major European bourses lost almost 1%, with France's CAC 40 down 0.91 and the oil heavy FTSE 100 posting its worst session in two weeks, as government bond yields across the euro area fell to their lowest levels in at least three weeks.
The pan-European STOXX 600 index fell 0.5%, with the automobiles and parts index sliding the most, down 2.9%.

• Orders for German-made goods posted their sharpest slump in May since the first lockdown in 2020, data showed on Tuesday, hurt by weaker demand from countries outside the euro zone and fewer contracts for machinery and intermediate goods.
The data published by the Federal Statistics Office showed orders for industrial goods fell by 3.7% on the month in seasonally adjusted terms, marking the first drop in new business this year.

• Britain's construction industry recorded its fastest growth in 24 years last month, bolstered by a jump in demand for new homes and commercial property, but the sector was beset by a record rise in the cost of raw materials. The monthly purchasing managers' index data underscored the speed of Britain's broader economic rebound as coronavirus restrictions ease, and also how bottlenecks in supply chains are creating inflation pressures.
The IHS Markit/CIPS construction PMI jumped to 66.3 in June from 64.2 in May, its highest since June 1997 and above all forecasts in a Reuters poll of economists.

• The economic sentiment in Germany in July is expected to drop compared to June, the Centre for European Economic Research (ZEW) said on Tuesday. The sentiment for the entire Eurozone was forecast to fall in July as well. The Economic Expectations Index for Germany is at 63.3 in July, compared to 79.8 in June, while the same index for the Eurozone is at 61.2 from 81.3 in June.
Meanwhile, the Current Situation Index for Germany in July jumped to 21.9 from -9.1 in June, while it grew 30.4 points from -24.4 to 6 points in the Eurozone.

• Euro zone monthly retail sales rose more than expected in May after a drop in April, driven mostly by purchases of non-food products and car fuel, data released on Tuesday showed.
The European Union's statistics office Eurostat said retail sales in the 19 countries sharing the euro increased 4.6% month-on-month in May and were 9.0% higher than a year earlier.
Important Daily Events:
• At 06:00 (GMT) German Industrial Production m/m is due. This indicator measures the change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities.

• At 08:30 (GMT) French Trade Balance is expected. Export demand and currency demand are directly linked because foreigners must buy the domestic currency to pay for the nation's exports. Export demand also impacts production and prices at domestic manufacturers.

• At 07:30 (GMT) UK Halifax House Price Index (HPI) is coming up. This is a leading indicator of the housing industry's health because rising house prices attract investors and spur industry activity.

• At 08:00 (GMT) Italian Retail Sales m/m is also expected. This indicator measures the change in the total value of sales at the retail level from one month to the next.

• At 09:00 (GMT) EU EU Economic Forecasts are also due. The forecasts serve as the European Commission's basis for evaluating economic performance and trends of EU member states in regard to potential austerity measures and other forced spending cuts.

European indices Yesterday :

• DAX: -0.96%
• EUROSTOXX 50: -0.85%
• FTSEMIB: -0.84%
• CAC40: -0.91%