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On July 13th, Citigroup strategists stated that the UK stock markets strong defensive nature and heavy commodity weighting are diminishing its appeal as geopolitical tensions ease. A team led by Beata Manthey downgraded the UKs rating in their global asset allocation from "overweight" to "underweight," favoring investments in the US and Japanese markets. The team maintained a "neutral" rating for European markets excluding the UK. The team stated, "The UK markets strong defensive nature and high commodity weighting have diminished its appeal in an environment of earnings growth and market leadership diffusion." Benefiting from its approximately 10% energy stock weighting, the UK benchmark FTSE 100 index performed exceptionally well until mid-April, with energy stocks such as BP and Shell benefiting from the oil price surge caused by the Iran conflict. Meanwhile, the indexs nearly 35% allocation to defensive sectors such as healthcare and consumer staples made it a relatively safe haven during periods of geopolitical tension or economic recession. However, since the US-Iran ceasefire was announced on April 8th, the FTSE 100 has significantly underperformed.The commander of the Ukrainian drone force stated that Ukrainian drones struck 15 Russian vessels in the Sea of Azov, including seven oil tankers.Market news: WeRide (WRD.O) is accelerating the global expansion of its end-to-end intelligent driving solutions.The New Taiwan dollar fell to 32.226 against the US dollar, a new low since the end of April 2025.July 13th - Morgan Asset Management predicts that central banks will likely maintain a slightly hawkish stance, but will be more restrained in raising interest rates. They now believe the Federal Reserve will keep interest rates unchanged throughout 2026, with one rate cut in the second half of 2027; the UK and Europe will maintain their current stance for the remainder of this year. As for the Bank of Japan, they expect it to continue its gradual normalization, with one rate hike each in the second half of 2026 and 2027.

The EUR/USD rise is getting close to 1.0200 as investors await US inflation data

Daniel Rogers

Aug 09, 2022 14:58

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The EUR/USD moves in the 1.0200 range during Tuesday's Asian session after falling from 1.0221 as traders look for fresh data. The major currency pair gained over the first part of the week but lost some of those gains by Monday's close. Recent price fluctuations, however, seem to be constrained by a lack of noteworthy data or events and a cautious attitude ahead of Wednesday's release of the US Consumer Price Index (CPI) for July.

 

Gains in the EUR/USD the day before are shown by higher readings of the Eurozone Sentix Investor Confidence Index and a drop in US Treasury yields. The primary sentiment indicator Index, however, increased in August from -26.4 to -25.2, which was projected to be the value. According to specifics, the eurozone's present state has improved from this month's lowest position since March 2021, when it was -16.5, to -16.3. The expectations index is at its lowest level since December 2008, despite a little increase to -33.8. It is still very close to that level. The US Dollar Index (DXY), in contrast, saw a daily decrease of 0.19 percent to 106.37.

 

The moderate Azione's resignation from the newly formed alliance ahead of the September elections looks to have put negative pressure on the Euro elsewhere due to Italian political worries.

 

The moderate Azione has backed out of its coalition with the Democratic Party and the +Europe party after only agreeing to do so last week. According to party leader Carlo Calendar, "the parts didn't fit." According to Reuters and Market News Publishing US, the alliance was formed in an effort to stop a more conservative government from taking office after the election on September 25.

 

Notably, gains in the EUR/USD the day before appeared to have been constrained by US President Joe Biden's displeasure of China's efforts to retake Taiwan and his censure of House Speaker Nancy Pelosi's trip to Taipei.

 

These actions caused the 10-year US Treasury rates, which had increased by 14 basis points (bps) the day before, to fall by around seven basis points (bps) to 2.75 percent. Wall Street also started Monday's trading day on a positive one before ending on a mixed note, albeit as of press time, S&P 500 Futures are showing minor gains.

 

Participants in the EUR/USD market may be interested in the second quarter's (Q2) US Nonfarm Productivity and Unit Labor Costs data. Forecasts suggest that US Nonfarm Productivity may rise to -4.6% from -7.3%, while Unit Labor Costs may decrease to 9.5% from 12.6%. The news regarding Taiwan and Russia will also be important for determining direction.


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