Europe Seen Higher on Oil Bounce and Cautious Fed

European equity markets are poised to open higher on Thursday, breaking a three day losing streak following a positive session in the U.S. and a bounce in oil prices.

Brent crude rebounded off its lows on Wednesday to end the session higher although I remain unconvinced that it can push on much from here. It is looking a little toppy to me and while it continues to be well supported around $46.65, it is also being sold into at an earlier stage each time it rallies. I think we could see it break lower over the next couple of weeks.

Brent Daily

Source – OANDA fxTrade Platform

The cautious tone from the FOMC minutes on Wednesday may be giving investors a lift today. The Brexit vote alone is likely to deter them from raising rates until at least the end of the year as they wait to see what the knock on effects will be, both from an economic and financial markets perspective.

We’ll get the monetary policy meeting accounts from the ECBs June meeting today and, as with the Federal Reserve, while the minutes may be of interest, having occurred prior to the Brexit vote they’re going to be somewhat outdated. Still, it will be interesting to see whether Brexit was discussed, whether there is a plan of action in the case of a vote to leave and what it could be.

There’s also plenty of economic data to come today including industrial production figures from the U.K. and Germany, ADP non-farm employment change and jobless claims figures from the U.S. and EIA crude oil inventory data. Last night’s EIA release showed a large drawdown of 6.73 million barrels which far exceeds what is expected from EIA today.

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Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.