European equities look muted on Wednesday, with major indexes little changed as investors express a cautious tone ahead of the looming US jobs report due on Friday. Fresh data showed that German retail sales contracted 5.5% in May versus the previous month and expanded 4.4% over the last twelve months. On the positive side, the Eurozone producer prices gained 1.0% MoM and 7.6% on a year.
Elsewhere, the ECB’s Knot said that recovery in Europe seems to be going faster than expected. He also added that sustainable recovery only possible if coronavirus is contained on a global scale.
Against this backdrop, the UK FTSE 100 gains just 0.04% to 7,083, Italy’s FTSE MIB adds 0.26% to 25,388, France’s CAC 40 is up by 0.15% to 6,498, while the German DAX 30 rises by 0.22% to 15,600. US stock index futures are pointing to positive open early on Wednesday.
In currencies, the USD index managed to regain the 90.00 handle as US 10-year Treasury yields climbed back above the 1.60% figure. As such, the euro extended the retreat from local highs seen on Tuesday around 1.2255. The pair slipped below 1.2200 to find support at the 20-DMA that arrives around 1.2170. Failure in this area would bring the 1.2130 region back into market focus. However, as speculation of higher inflation now looks to have lost some momentum, a broader scenario surrounding the greenback remains negative, so downside risks for the euro are looking limited.
Meanwhile, oil prices keep rising on Wednesday following yesterday’s rally that took the barrel to the $71.30 area, as OPEC+ provided an upbeat demand assessment. Later today, the API weekly report could affect market sentiment. On the negative side, dollar recovery caps gains in the oil market at this stage.
Elsewhere, gold prices rallied to fresh January highs around $1,916 before retreating marginally. During the correction, the bullion dipped below the $1,900 figure, staying under some pressure during the European trading on Wednesday as the dollar rallies across the board. If the precious metal extends its bearish correction, the $1,890 figure would act as the immediate support.
Nathan Lambert, Head of Global FX Analytical Department