European markets weaken, with Eurozone ZEW and trade data weakening

European markets are losing traction once again today, with equities remaining under pressure after yesterday’s session that saw Chinese economic data highlight the ongoing demand issues from the world’s largest economy. A sharp decline in the German ZEW economic sentiment survey report represented the first move lower in a year, falling to a four-month low of 41.8. We also saw a eurozone trade balance figure that came in well short of expectations, with a €13.9 bn surplus driven primarily by weak imports (-6.4%) rather than export strength (-0.5%). With the ECB interest rate decision due on Thursday, traders will likely hope that this fresh source of economic weakness could further enhance the chance of a rate cut in September.

Donald Trump’s decision to opt for JD Vance as his VP pick has doubled down on the bullish Bitcoin narrative, with the cryptocurrency soaring into a three-week high of $65,000 yesterday. With Vance declaring $250k of Bitcoin holdings in 2022, 2024 could go down as the year that Crypto hit the mainstream, with Wall Street and the White House both on-board. While we are seeing a decent pullback for Cryptocurrencies this morning, bulls will be hoping for fireworks when Trump makes an appearance at the Bitcoin conference in Nashville next week.

 Looking ahead, the latest Canadian CPI inflation reading looks to provide potential CAD volatility ahead of a July rate cut. With markets currently pricing a 83% chance that the BoC cuts next week, any particularly notable decline in Canadian CPI could help further shift expectations. Meanwhile, the latest US retail sales figure looks set to bring a fresh insight into the US consumer at a key moment, with traders looking for clues over the potential trajectory of earnings in the weeks ahead. The Wall Street theme continues today, with Bank of America, Morgan Stanley, Charles Schwab, and State Street due to report.