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In June, German PMI Manufacturing rose to 45.4, up from 44.3 and beat expectation of 44.6. But it's staying well below 50. PMI Services, rose to 55.6, up from 55.4 and beat expectation of 55.3. PMI Composite was unchanged at 52.6.

Commenting on the flash PMI data, Trevor Balchin, Economics Director at IHS Markit said:

"The June PMI confirms that German growth has stabilised at a moderate pace in the second quarter. The Composite Output Index trended at 52.5 over Q2, just above the prints for the previous two quarters.

"Service sector growth remains above-trend and although the manufacturing downturn continued into June, there are tentative signs that the worst has passed with the key indices for output, new orders, exports and employment all above their recent multi-year lows.

"The longer-term outlook for the German private sector remains weak, however. The Future Output Index fell to a 56-month low in June as a result of weaker sentiment among service providers. Manufacturers currently expect broadly no change in output over the next 12 months, although this represents an improvement compared with the pessimism of recent months."

Full release here.

In June, France PMI Manufacturing rose notably to 52.0, up from 50.6 and beat expectation of 50.9. That's also the highest level in 9 months. PMI Services rose to 53.1, up from 51.5 and beat expectation of 51.6. It's the highest level in 7 month. PMI Composite rose to 52.9, up from 51.2, a 7-month high.

Commenting on the Flash PMI data, Eliot Kerr, Economist at IHS Markit said:

"The French private sector maintained upward momentum at the end of the second quarter, recording a third successive monthly rise in business activity. Moreover, the rate of expansion accelerated for the second month in a row, reaching the quickest since last November. Taking into account the strong finish to the quarter, PMI data now points to around 0.3% QoQ GDP growth.

"The latest data also revealed a further improvement in labour market conditions, with staff numbers rising at the fastest rate for eight months. Service providers continued to record solid employment growth, while manufacturers recorded their sharpest workforce expansion for almost a year."

Full release here.

Hopes for a speedy reduction in the Fed's interest rates and the ECB's readiness to ease its policy this week generated a rally in the stock markets. As a result, S&P500 updated its historic highs on Thursday. However, on Friday, the markets are alert to details: investors are concerned that without tangible progress in trade negotiations, the economy will continue to slow down. This is partly due to the US tariffs, as well as fears over even greater sanction tightening in the future. Moreover, tensions with the US are likely to be raised further, following the shooting down of an American drone by Iran. This could, in turn, drive up the Crude oil prices – which may be an additional obstacle to further economic growth.

Stocks

S&P500 updated its historical highs on Thursday, responding to the Fed's policy easing. However, on Friday morning, the rally lost momentum. To some extent, this was caused by the traditional Friday position-closing by investors. It is also worth paying attention to the fact that since January 2018, the updating of historical peaks is followed by corrective kickbacks from 2% to 20%. Consequently, this will be a contributing factor towards a cautious outlook for the stock markets next week.

EURUSD

The dollar's retreat supported the euro, sending EURUSD to an area above 1.1300. The single currency twice attempted – unsuccessfully – to break below 1.1100 in May. Meanwhile, in June, the support level appeared to have moved to 1.1200. Given that the softness of the Fed's policy provides a sufficient argument for a downward trend break, it may soon pass the "test of strength" in the form of a 200-day MA.

GBPUSD

The British pound rose to 1.2725 on Thursday, but after the BoE meeting GBPUSD was discarded from local maximums. However, it is worth noting that – in contrast with Europe and the United States – the Bank of England continues to adhere to a more hawkish attitude, not excluding a potential increase in interest rates if the economy avoids disorderly Brexit negative effects.

Cable maintains firm tone in early Friday's trading despite upside rejection just under Thursday's high (1.2727) overnight.

Near -term price action is holding between 1.2727 high and post-BoE low at 1.2671, supported by comments from BoE Governor Carney, who dismissed Johnson's claim on no-deal Brexit, but weighed down by BoE's cut of Q2 growth forecast.

The pair probes again above falling 30SMA (1.2694) following Thursday's false break, with repeated failure to generate initial negative signal.

Also, end-of-week profit-taking after strong three-day rally, may push the price lower, as momentum is weakening and stochastic is entering overbought zone on daily chart.

Dips need to hold above 1.2670/58 (top of thick hourly cloud / 20SMA) to keep bullish bias for renewed attempts towards key barrier at 1.2763 (Fibo 38.2% of 1.3179/1.2505 / 7 June high).

Res: 1.2727, 1.2763, 1.2810, 1.2842
Sup: 1.2694, 1.2670, 1.2658, 1.2649

Daily Pivots: (S1) 1.1239; (P) 1.1278; (R1) 1.1329; More......

With 1.1255 minor support intact, intraday bias in EUR/USD remains mildly on the upside for 1.1347 resistance first. Break there will add to the case of medium term bottoming and target 1.1660 key fibonacci level next. On the downside, below 1.1255 minor support will turn intraday bias back to the downside for 1.1181 support instead.

In the bigger picture, considering bullish convergence condition in daily and weekly MACD, a medium term bottom could be in place at 1.1107 after hitting 61.8% retracement of 1.0339 (2016 low) to 1.2555 (2018 high) at 1.1186. Hence, for now, risk will stay on the upside as long as 1.1107 low holds. Break of 1.1347 will extend the rebound towards 38.2% retracement of 1.2555 to 1.1107 at 1.1660. However, sustained break of 1.1107 will confirm resumption of down trend from 1.2555.

The EUR/USD has formed a small ascending scallop pattern with 1.1240-50 as established POC zone. Uptrend continuation is possible if historical resistance breaks.

In Forex trading, price tends to repeat itself. That is one of the biggest merits in Forex trading. For that reason, blue lines on the chart represent historical levels of s/r. On the EUR/USD chart we can see that 1.1323 is the daily resistance and the break of it will target 1.1341 with a possible extension to 1.1372. Uptrend is strong and it is obvious on the H1 that buying the dips continues with the intraday trading.

Global equity bulls are continuing their unstoppable momentum into the conclusion of the trading week, as well-orchestrated, cautious remarks from a chorus of central bank heavyweights fuel speculation that a new era of monetary policy easing to counter decelerating global growth is on the menu.

Major central banks including the European Central Bank (ECB), Federal Reserve (FED), Bank of England (BoE) and Bank of Japan (BoJ) have all signalled a willingness to ease policy if needed, consequently reviving risk sentiment among investors.

The smoky atmosphere clouding the global outlook of unpredictable external risks has persistently weighed on the world economic outlook, meaning that the prospect of central banks coming to the rescue has provided the hero to this story that investors want to see.

Although Asian shares saw some mild profit taking on Friday morning, they are still en route to posting their best weekly gains since January. The real winner from the Fed’s dovish statement and return of risk appetite is the S&P 500, which has set a new record high of 2954.18.

While the stock market rally is commendable, the pressing question on the minds of many investors is whether this momentum is sustainable.Where global stocks trade during the third quarter of 2019 will be highly dependent on US-China trade developments and whether major central banks actually move forward with easing monetary policy. Should trade tensions remain a major theme and central banks hold back from easing, equity markets could find themselves exposed to downside shocks.

Gold leaps past $1400 on Dollar weakness and geopolitics

It has been an incredibly bullish trading week for Gold which has blasted past the $1400 level for the first time since 2013.

The combination of Dollar weakness, speculation over lower US interest rates and geopolitical tensions have encouraged investors to sprint to the hills and pick up Gold in their portfolio.

With major central banks signalling potential rate cuts in the future, Gold is set to push higher, especially when considering how the precious metal performs well in low interest rate environments. Looking at the technical picture, Gold has already hit $1400 on the daily charts. A weekly close above this level is seen encouraging a move towards $1413.

Commodity spotlight – Oil

Oil markets were turbocharged by geopolitical tensions this week with Brent rushing past $64, its highest level since May.

While geopolitical tensions appear to be doing OPEC+ a favour by supporting Oil prices, the question is - for how long?

The OPEC+ alliance appears set to extend its supply cuts into the second half of 2019, as producers look to build a more sustainable floor under Oil prices and rebalance global markets. Despite pushing higher on the back of geopolitical tensions, Oil prices remain exposed to downside shocks. For as long as concerns over slowing global growth and weak demand for Crude remain major themes, the Oil rally is at risk of running out of steam, regardless of the expected OPEC+ extensions on supply cuts.

Daily Pivots: (S1) 1.2647; (P) 1.2689; (R1) 1.2745; More....

NO change in GBP/USD's outlook. Intraday bias remains mildly on the upside. Rebound from 1.2506 short term bottom would target 55 day EMA (now at 1.2801). For now, we'd expect strong resistance from 38.2% retracement of 1.3381 to 1.2506 at 1.2840 to bring fall resumption. On the downside, below 1.2626 minor support will turn intraday bias back to the downside for 1.2506 first. Nevertheless, sustained break of 1.2840 will bring stronger rise to 61.8% retracement at 1.3047 next.

In the bigger picture, medium term decline from 1.4376 (2018 high) is possibly ready to resume. Decisive break of 1.2391 would target a test on 1.1946 long term bottom (2016 low). For now, we don't expect a firm break there yet. Hence, focus will be on bottoming signal as it approaches 1.1946. In any case, medium term outlook will stay bearish as long as 1.3381 resistance holds, in case of strong rebound.

• US stocks soar to new all-time highs after Fed
• European PMIs give the euro a helping hand
• UK leadership contest reaches final two – sterling outlook neutral
• Oil advances as supply concerns heighten, demand picture brightens

Fed's dovish signals propel US stocks to new records

Stock markets have been among the main beneficiaries after the Fed laid the groundwork for near-term rate cuts, with the benchmark S&P 500 (+0.95%) index closing at a fresh record high yesterday. Falling interest rates typically boost risky assets like equities as investors can borrow at even cheaper rates to buy them, and companies see their cost of borrowing drop, aiding their profitability. Not to mention that bonds suddenly yield much less, making them less attractive by comparison.

To be sure, optimism that the American and Chinese presidents can reach an agreement to restart sincere trade negotiations when they meet next week is likely adding fuel to this ‘risk' rally. What's most striking, is that risky assets are rallying alongside safe havens, with gold soaring to fresh 6-year highs earlier today to touch $1410 per troy ounce before retreating, and the Swiss franc being by far the best performer in the FX market yesterday.

The fact that ‘all boats are rising' signals that while investors are happy to pile back into equities in anticipation of cheaper money, they are also increasing their defensive exposure – so looser monetary policy alone doesn't seem enough to calm nerves. Perhaps that can change next week if Trump and Xi can agree to a trade ‘ceasefire', implying that the path of least resistance for equities currently seems higher.

European PMIs paint a brighter picture, lift the euro

Preliminary French and German PMIs for June have just been released, and were broadly stronger than expected. While this uptick isn't enough to suggest the ECB won't roll out more stimulus, it's enough to cast some doubt on that prospect, which is a positive for the euro. Particularly considering that the Fed has essentially ‘locked' itself in for a July cut, implying that the near-term risks surrounding euro/dollar may be tilted to the upside.

BoE sings a more cautious tune, Tories reach ‘final two'

The Bank of England (BoE) appeared a touch more cautious yesterday, as despite maintaining the view that interest rates still need to rise a little, policymakers also noted that the ‘perceived' probability of a no-deal Brexit has risen. The pound ticked down, but quickly recovered.

More importantly, the Tory leadership race has reached the final two – Boris Johnson and Jeremy Hunt. Now, this contest will be decided by the 160,000 Conservative Party members, who have until late July to make their pick. Hunt, who voted Remain back in 2016, may be the more sterling-positive option, but he is also a massive ‘underdog'. In any case, in an environment of a falling US dollar, the outlook for the pound suddenly seems neutral, from negative earlier.

Oil advances on positive demand backdrop, Iran concerns

‘Black gold' had a good run yesterday, with WTI crude gaining more than 5% as the demand outlook improved while the supply picture darkened. Speculation for more trade negotiations is easing concerns around global growth, while news that Iran shot down a US drone added to the body of evidence that tensions are near a boiling point. In fact, reports today suggest Trump ordered a military strike on Iran after this, but called it off.

Hence, the outlook for oil is improving, albeit perhaps for the ‘wrong' reasons. Let's not forget that there's still an OPEC meeting on July 1, and expectations for an extension of the current production cuts could also help keep a bid under the precious liquid.

Daily Pivots: (S1) 0.9757; (P) 0.9854; (R1) 0.9916; More...

Intraday bias in USD/CHF remains on the downside as fall from 1.0237 is in progress. Next target is 0.9716 support. On the upside, break of 0.9861 minor resistance will turn intraday bias neutral and bring consolidations. But recovery should be limited well below 1.0014 resistance to bring fall resumption.

In the bigger picture, USD/CHF's break of long term trend line support is the first indication of medium term reversal. That is, rise from 0.9186 (2018 low) could have completed at 1.0237 already). Sustained break of 38.2% retracement of 0.9186 to 1.0237 at 0.9836 will confirm and target 61.8% retracement at 0.9587. However, strong rebound from 0.9836 will revive medium term bullishness for 1.0237 and above.