European major indices close the day higher

German DAX +0.5%

The major European indices are closing the day higher. The provisional closes are showing:

  • German DAX, +0.5%
  • France’s CAC, +0.7%
  • UK’s FTSE 100, plus at 1.2%
  • Spain’s Ibex, +1.1%
  • Italy’s FTSE MIB, +0.7%
in other markets as London/European traders look to exit:
  • Spot gold is trading up $0.60 or 0.03% at $1770.66.
  • Spot silver is down $0.11 or -0.44% at $25.98.
  • WTI crude oil futures are trading at $74.85. That’s up $1.38 or 1.92%
  • bitcoin is trading down $1130 or -3.27% of $33445
In the US debt market, the yields are our higher with the 10 year rising by 3.4 basis points at 1.4781%.
US yields are higher

OPEC+ JMMC proposes to OPEC+ to extend oil supply mgt until end of 2022

Headlines from OPEC+ JMMC sources

  • OPEC+ JMMC proposes to OPEC+ to extend oil supply management until end of 2022
  • OPEC+ ministerial committee proposes to OPEC+ to raise oil output by 0.4M BPD a month in August-December. This was congruent with early reports

Crude oil
The price of crude oil reach day high price of $76.20 earlier after breaking above the earlier high at $74.42 and squeezing any shorts ahead of the OPEC+ meeting.

The prices since rotated back to the downside and each day low of $74.59.  As long as the price can remain above the $74.42 level, the bias tilt intraday remains in the favor the buyers.

AUDUSD trades to a new 2021 low

AUDUSD traded lowest level since December 2020

The AUDUSD is traded to a new session low and in the process is trading to a new low for 2021 and new low going back to December 21, 2020.
AUDUSD traded lowest level since December 2020_
The price has cracked through the June 18/June 21 lows down to 0.7476. That level is now a close intraday risk level for sellers.   Stay below keeps the sellers firmly in control intraday.
Looking at the daily chart below, the deeds 21 low comes in at 0.7461. Move below that level and traders would be targeting down toward the 0.7400 level and the 61.8% retracement of the move up from the November 2020 low at 0.73784.
AUDUSD on the daily chart

UK June final manufacturing PMI 63.9 vs 64.2 prelim

Latest data released by Markit – 1 July 2021

The preliminary report can be found here. A slightly lower revision but this is still a very solid reading, with output, new orders, and employment conditions continuing to hold among the best seen throughout the survey’s history.
That said, much like the euro area’s readings earlier, supply chain disruptions are leading to a record rise in price increases. Markit notes that:

“UK manufacturing maintained a near survey-record pace of expansion at the end of the second quarter, as the reopening of economies at home and overseas supported increased production, new orders and employment. Solid business confidence and rising backlogs of work also suggest that the current upturn has further to run.

“The sector is still beset by rising cost inflationary pressures, however, as Brexit-related trade issues exacerbated global supply chain delays. The resulting widespread raw material shortages drove purchase prices up to the greatest extent on record, leading to an unprecedented steep rise in selling prices. There are also widespread reports of supply issues causing disruptions to production schedules and impeding the re-building of buffer stocks.

“The continued inflationary impact of capacity issues at both manufacturers and their suppliers will be a further factor keeping headline inflation above the Bank of England’s 2% target in coming months.” 

Eurozone June final manufacturing PMI 63.4 vs 63.1 prelim

Latest data released by Markit – 1 July 2021

A slight revision higher with the headline being yet another fresh record for a fourth consecutive month now as manufacturing conditions in the region keep more solid as virus restrictions are loosened, with output coming in strong.

That said, there is a consistent theme across all the readings and that is despite more robust demand conditions in general, there is marked supply-side constraints that are persisting – which is leading to price rises at a record pace in Europe.
It remains to be seen if said disruptions will eventually come to dampen demand prospects but for now things are still holding up well as the reopening gets underway.
Markit notes that:

“Eurozone manufacturing continued to grow at a rate unbeaten in almost 24 years of survey history in June as demand surged with the further relaxation of COVID-19 containment measures and vaccination progress drove renewed optimism about the future.

“However, the sheer speed of the recent upsurge in demand has led to a sellers’ market as capacity and transportation constraints limit the availability of inputs to factories, which have in turn driven industrial prices higher at a rate not previously witnessed by the survey. Manufacturers are clearly willing to pay more to ensure sufficient supplies of key inputs.

“Encouragingly, there are several survey indicators which add to hopes that the current spike in prices will prove transitory.

“Widespread issues such as port congestion and a lack of shipping containers should soon fade as the initial rebound from the pandemic passes. Similarly, recent months have seen safety stock building as companies seek to protect themselves against potential future supply-chain disruptions, which has exacerbated the imbalance of demand and supply in the short-term. Once sufficient stocks are built, this effect should likewise fade.

“Finally, we have also seen the expansion of capacity via record employment growth and greater capital expenditure on business equipment and machinery. This expansion should raise output in sectors that are currently straining to meet demand, and hence remove some of the upward pressure on prices for these goods.”

Go to top