S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
Scotiabank highlights that the Euro is slightly softer versus the Dollar after touching levels last seen in mid-June, with fundamentals still supportive as yield spreads turn. Spot has nearly converged with their fair value based on the 2-year Germany–US spread. Further EUR/USD gains likely need a shift in relative central bank expectations or improved sentiment, with near-term range seen at 1.1500–1.1600.
Euro aligns with yield-spread fair value
“The EUR is entering Thursday’s NA session with a fractional 0.1% decline vs. the USD, trading defensively following an overnight push to a fresh local high reaching levels last seen in mid-June.”
“Fundamentals remain supportive and the EUR’s recent recovery has closely mirrored the turn in yield spreads. Spot EUR has largely closed the gap to our FV estimate narrowly based on the 2Y Germany-US yield spread, which currently stands at 1.1538.”
“Further gains will likely require some further shift in the outlook for relative central bank policy or an improvement in sentiment, as risk reversals reveal a continued premium for protection against EUR weakness.”
“In data, the second-tier euro area retail sales figures have offered a slight disappointment for June but were balanced by stronger German factory orders—neither release appears to have had any impact on spot.”
“Bullish—the latest recovery in the RSI is important, climbing into bullish territory with a push to the low 60s. The gains in spot have delivered a fresh multi-week high reaching levels last seen in mid-June, however we continue to note the persistence of near-term resistance around 1.1550. We look to a near-term range bound between 1.1500 and 1.1600.”
