The performance of stock market trading on the day has been influenced mainly by the extraordinary rally of Chinese indices, which have posted gains above 5% on both the Shanghai Composite Index and HongKong45, experiencing the highest one-day-rally of the last five years.
This excellent performance of the Chinese markets gives investors one more reason to maintain the tone of risk appetite in recent days, driven by a notable improvement in the economy, as reflected in the economic figures.
In Europe, the retail sales figure jumped to 17.8% in May after the fall of -12.1 the previous month. This is undoubtedly one of the essential data since it provides a direct measurement of domestic demand and economic aggregate of enormous weight in GDP and the one with the highest vulnerability due to measures of lock-down of the economy and social distancing.
This positive market sentiment has been reinforced with the publication of the US non-manufacturing ISM data for June, which has had a significant recovery to 57.1 from 45.4 the previous month.There is only one side to improve: the evolution of the pandemic in the United States so that the market will bet on more continuous rises in the stock markets that would imply losses in the US Dollar due to refuge capital flight.
This week the calendar of economic figures is of less relevance. The market will be more attentive to contagion data and potential news from the geopolitical side, mainly from Europe, regarding the agreement on the next generation rescue fund.
USD & EUR equities
The data released today and the better sentiment of risk in the market have weakened the Dollar and boosted currencies, especially the Euro.
EUR/USD has gained more than one figure on the day and has again touched the resistance level of 1.1350, which, if surpassed in a daily close, would drive the pair into a new uptrend with intermediate targets above 1.1500.
Another Euro cross that would benefit from a recovery market with higher risk appetite is EUR/JPY.
This pair, like all Yen crosses, loses value as the market risk aversion rises and it experienced a steep decline throughout the first half of June to 119.40, now it is in a bullish correction phase that needs to surpass the 122 zone to gain a new bullish momentum that would open the way to previous highs at 123.90.