Today's Key Points

Daily Forex Fundamentals | Written by Danske Bank | Jul 18 08 08:05 GMT |
Danske Daily
Today's Key Points

* Stock markets and bond yields are higher. JPY is weaker, as some risk appetite returns to the market on positive earnings reports and another plunge in crude oil prices
* Crude oil prices take another dive on surprise increase in US inventories. However, broad weakness within commodities
* It will be difficult to maintain the positive momentum because of disappointing earnings reports released after market close

Markets Overnight

US stock markets finished on a strong note yesterday evening on the back of both positive earnings reports and another plunge in crude oil prices. S&P 500 and Nasdaq both closed up 1.2%. Financial stocks performed particularly well after JPMorgan Chase delivered better-than-expected Q2 earnings. However, it will be difficult to maintain the positive sentiment on the stock market today, as Merrill Lynch, Microsoft and Goggle all published very disappointing Q2 earnings after the markets closed. Hence it has been difficult for Asian stock markets market to build on the positive momentum from Europe and the US this morning. Asian stock markets are down, with the Nikkei down 0.6% and the Hang Seng down 0.2%.

Crude oil prices took another dive yesterday, declining by about 4.0% just after US data showed an unexpectedly large increase in both crude oil and natural gas inventories. Crude oil has since recovered slightly and is trading just above USD 130 this morning. Commodity prices in general showed weakness yesterday, with the broad CRB commodity index declining 2.7%.

In the US, bond yields yesterday took their lead from the stock market and initially rose sharply. However, after the release of disappointing earnings reports after market close, US bond yields retreated and are largely unchanged compared to the European market close. This morning 2Y and 10Y US bond yields are trading at 3.98% and 2.48%, respectively.

On the FX market, EUR/USD is trading largely unchanged at 1.5865. With some risk appetite returning, JPY has weakened against both USD and EUR, and is this morning trading at 106.24 and 168.49, respectively. The Scandinavian currencies have benefitted from the increased risk appetite in financial markets. This morning EUR/SEK is trading at 9.4681 and EUR/NOK is trading at 8.0566.
Global Daily

Except for German producer prices at 08:00 and the Eurozone trade balance at 11:00, the calendar offers very little interesting macro data out of G7 today.

Elsewhere, focus will be on Q2 earnings announcements from financials. Citigroup publish Q2 results at 12:30, and this is likely to be the most important event of the day.

Bond markets are again today likely to follow general financial market sentiment - particularly equity/credit markets. However, it might also be wise to keep an eye on whether the oil price continues to trend down.
Scandi Daily

There are no major releases in Scandinavia today, and the Scandinavian markets are expected to take their lead from European markets.

Danske Bank
http://www.danskebank.com/danskeresearch

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