Is Oil on its Way Down?
German Business Ifo confirms a Healthy German Business Climate
An interesting week has started. While it will be mostly about what Bank of Japan and Fed deliver in their scheduled meetings, there are still other issues worth following, like the today’s already released German Ifo index for July – the main event of the day.
The Ifo confirmed the message from Friday PMIs that there is some insulation in European business sentiment to Brexit. The Ifo current assessment component actually moved up marginally, from 114.6 to 114.7, when there was supposed to be a decline. Also expectations part (covering the next 6M) of the Ifo index did not go down to the expected 101.6 pts.
DAX 30 and EURO React in a Positive Manner to German Ifo
DAX climbed up 80 pts in instant reaction to better than expected Ifo index for July.
EURUSD quickly climbed to about 1.0975 after the data, but is facing resistance already here, while the Ifo message seemed to deliver enough to see a test of the round level of 1.10.
Oil may have more Downside
The oil market was preparing for the US drilling activity on Friday by posting a decline in the afternoon. The reaction to the Baker Hughes data on number of active oil wells was positive – against the message sent by the release. So this was most likely a short covering reaction. This is confirmed by the market returning to declines overnight and in the morning with 44$/bbl tested on WTI now.
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