The European Union leaders' summit begins in Brussels. They will debate on the long-term budget, as well as on the European Recovery Fund - how to bring it to life.
Politicians' decisions may be crucial for the euro and sentiment on European stock exchanges.
The European Commission's plan for a EUR 750 billion recovery fund has been slightly modified by the European Council, but the proposal that is currently under negotiation does not differ significantly from the Commission's plan. The main opponents to this are now the Netherlands, Denmark, Sweden, and Austria, who do not quite like the way they will be burdened with expenditure. Germany seems to be the country that wants to push through the current project as soon as possible. The result of the EU summit could be one of the most important events for the European economy, euro, and stock exchanges.
In relation to macroeconomic data, next week may be relatively calm as far as publications from the United States are concerned. However, there will be interesting data on the real estate market, among others. The record-low interest rate on mortgages makes the purchase of real estate more affordable, which, once the restrictions are lifted, may lead to huge demand. This is also indicated by data on the number of mortgage applications. The recovery in the housing market, in turn, is usually accompanied by increased demand for home furnishings and furniture, garden equipment, and building materials. This may support the US economy, which is struggling with the second wave of COVID-19.
On Friday, 24 July, the PMIs indicators for July will be published for both Europe and the USA. The data may show how the rebound in economic activity looks like after the restrictions have been lifted and relaxed.
Daniel Kostecki, chief analyst, Conotoxia Ltd. (Forex Cinkciarz.pl service)
The above comment is not a recommendation within the meaning of the Regulation of the Minister of Finance of 19 October 2005. It has been prepared for information purposes and should not constitute a basis for investment decisions. Neither the author of the study nor Conotoxia Ltd. shall be liable for investment decisions taken on the basis of the information contained in this comment. Copying or reproduction of this study without the written permission of Conotoxia Ltd. is prohibited.
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