After turbulent trading last week, European stocks started the trading week on a positive note following decent gains seen in Asia. Equities bounced despite the data showed that China’s manufacturing activity growth in January slowed compared to the previous month. Meanwhile, the UK manufacturing sector activity improved more-than-expected in the month of January as the seasonally adjusted IHS Markit/CIPS PMI was revised higher to 54.1 versus 52.9 expected. In the Eurozone, the final manufacturing PMI arrived at 54.8 in January versus the 54.7 preliminary estimate. Eurozone December unemployment rate came in at 8.3%, in line with expectations. German retail sales slumped 9.6% in December, as lockdowns hit consumer spending in Europe’s largest economy.
Elsewhere, a group of 10 Republican senators sent President Joe Biden a letter, urging him to consider a smaller, relief proposal. Also, investors continue to keep an eye on developments in the deployment of coronavirus vaccines after the U.K. issued a record number of Covid-19 vaccines on Saturday.
Against this backdrop, the FTSE 100 in London adds 0.57% to 6,443, Italy’s FTSE MIB gains 0.42 percent to 21,664, France’s CAC 40 is up by 0.70% to 5,436, while the German DAX 30 rises by 0.94% to 13,561. US stock index futures rose on Monday following last week’s heavy losses — the worst for the market since October.
In currencies, the dollar looks mixed on Monday, with the EURUSD pair turning negative on the day in recent trading after a failed bullish attempt around 1.2135 earlier in the day. As a result, the prices slipped below the 1.2100 figure that now represents the immediate resistance ahead of the US PMI data. The common currency will likely stay under pressure in the short term as traders keep a cautious tone ahead of the upcoming debate on the stimulus package by US policymakers due later in the week. If the pressure intensifies any time soon, EURUSD could threaten last week’s lows in the 1.2060 area.
Meanwhile, oil prices struggle around $55.50 on Monday while staying just above the 20-DMA. The futures remain within a familiar trading range these days amid the lack of significant drivers that could push the prices in either direction. Despite the bullish bias in the intraday chart, downside risks continue to persist in the short term, especially as the dollar looks steady while risk sentiment remains fragile.
Nathan Lambert, Head of Global FX Analytical Department