Global macro overview for 27/06/2017

Global macro overview for 27/06/2017:

The better than expected data from Germany confirms the positive economic sentiment prevails in the Eurozone. The Ifo Business Climate data beat the expectations of 114.7 with 115.1 points. The same situation was observed in the two remaining sub-indices. The Ifo Current Assesment was released at the level of 124.1 points, better than expectations of 123.2 points, and the Ifo Expectations Index was released at the level of 106.8 points, better than expectations of 106.4 points.

The behavior of the subindex in the report points to the degree of the advancement of the business cycle in Germany. In recent months, the components that describe the current situation are much stronger, less about the prospects for the next 6 months. The subindex of expectations, as opposed to the main one and current assessment index, is still below the 2010 and 2014 highs. German entrepreneurs are not so concerned about what will happen in the economy in the short term. On the other hand, slightly less optimistic is the prognosis for the beginning of 2018. The markets do not seem to worry specifically what will bring the future more distant than the next quarter anyway.

If we take into the account the current differences in economic projections by FED and ECB (The FED looks at the economic data through its fingers and continues to underline the belief that it is a temporary weakness and the economy remains on the right track. The ECB, on the other hand, maintains that policy normalization must precede more credible signals that economic recovery puts pressure on underlying prices), the split between the European and American economy does not immediately translate into a strengthening of the Euro against the Dollar.

Let's take a look at the EUR/USD technical picture at the longer term time frame like daily. The pair again was unable to settle above 1.1200 level. The barrier standing on the road to 1.1300 is the resistance zone of 1.1220-30. The deeper pullback would be indicated only by breaking 1.1108. The course is in the persistent range of 1.1100 -1.1300, due to the fact that the relative strength in the data does not translate into the corresponding changes in central bank attitudes.


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