European Open: German inflation reports in focus, brent hits resistance

Matt Simpson financial analyst
By :  ,  Market Analyst

Asian Indices:

  • Australia's ASX 200 index rose by 61.5 points (0.9%) and currently trades at 6,884.70
  • Japan's Nikkei 225 index has risen by 47.99 points (0.17%) and currently trades at 27,759.74
  • Hong Kong's Hang Seng index has fallen by -55.64 points (-0.27%) and currently trades at 20,614.40
  • China's A50 Index has risen by 61.57 points (0.44%) and currently trades at 13,987.67


UK and Europe:

  • UK's FTSE 100 futures are currently up 17 points (0.23%), the cash market is currently estimated to open at 7,365.23
  • Euro STOXX 50 futures are currently up 18 points (0.5%), the cash market is currently estimated to open at 3,625.78
  • Germany's DAX futures are currently up 47 points (0.36%), the cash market is currently estimated to open at 13,213.38


US Futures:

  • DJI futures are currently down -55 points (-0.17%)
  • S&P 500 futures are currently down -57.25 points (-0.45%)
  • Nasdaq 100 futures are currently down -9.75 points (-0.24%)





Equity markets continued to move higher overnight as appetite for risk was fuelled by a less hawkish Fed. The ASX 200 was one of the top performers and rose around 1%, although the Nikkei 225 handed back earlier gains on concerns over corporate earnings.


The US dollar continued lower overnight with the US dollar touching a 17-day low, further helping to lift commodities across the board.


The Japanese yen was the strongest currency as traders unwound bets following the less hawkish than hoped Fed meeting. USD/JPY fell around -0.9% to a 3-week low, whilst the yen also strengthen across all other FX majors. The Canadian and US dollars were the weakest majors.


Australian retail sales rise, but slower than expected as inflation began to weigh on consumption. Yet the Australian dollar still climbed to a 17-day high thanks to the weaker dollar.



Regional CPI’s in focus for Germany


At 09:00 BST we several inflation reports for regional Germany released, and that can be a good proxy for subsequent inflationary pressures for Germany and the Eurozone as a whole. And with inflation generally rising the world over, the bigger surprise would be to see further signs of it softening. However, over the past hour we have seen inflation for Nordrhein-Westfalen rise to 7.8% y/y from 7.5% y/y, and as these releases tend to track one another it paints an upside picture for remaining regions today. German CPI is then released at 13:00, then continuous and initial jobless claims come into focus at 13:30 where we’ll be looking for further signs that the employment situation is softening.



Brent rises to pivotal resistance zone:


Earlier this week we noted a potential head and shoulders pattern which projects an upside target around $120. We can see that it has continued to rise as part of the ‘right shoulder’ yet the has so far been unable to confirm the bullish reversal pattern. Given the bearish trendline and $108.50 level continue to cap as resistance, we’re also on guard for a swing high to form as oil has so far failed to capitalise on a weaker US dollar.


Economic events up next (Times in BST)




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