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European Stock Markets:

• European stocks trade slightly higher; Germany’s DAX reaches a five-week high at 16,240 points.
• Investors are optimistic about the end of the US tightening cycle.
• Focus on earnings releases and anticipation of ECB’s policy statement.

Corporate Announcements:

• Nestle raises full-year organic sales outlook; Renault achieves largest-ever operating margin.
• Airbus surpasses expectations with higher underlying operating profit and maintains financial goals.
• Shell reports 56% decline in profits, Barclays’ H1 profit meets expectations.

Euro and Central Bank Decisions:

• Euro strengthens above $1.1 due to dollar weakness after Fed’s rate increase.
• ECB set to raise interest rates for the ninth time, keeping options open for further hikes.
• Eurozone economy shows signs of weakness with nearly triple the target inflation.
• Flash PMI surveys reveal significant contraction in manufacturing, nearing three-year lows.

German 10-Year Government Bond Yield:

2 Months Ago

• German 10-year bond yield falls to 2.4%, close to a three-week low after weak economic data.
• German private sector enters contraction territory for the first time since January.
• ECB is likely to deliver an additional 25 bps rate hike, but cooling inflation may prompt revisions in September.

The Euro is showing an upward momentum against the dollar, while absorption or euro-long liquidations around the ECB policy statement may influence further scenarios. A pullback in the Euro’s value could prompt core euro-long buyers to add to their positions, especially with the potential interest rate hike expected to have a bullish effect on the rate.

The lower dollar and negative volatility for the euro currency may contribute to its buying effect. From the daily perspective, the Euro might aim to establish a balanced rate range as it seeks to reach the upper extreme.

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