Despite mostly positive dynamics in Asia, European stock markets slipped on Thursday as investors are getting cautious ahead of the US jobs report due on Friday. Also, market participants are digesting fresh economic data. A private survey showed slowing Chinese services activity growth in May. In the Eurozone, the final service PMI came in at 55.2 versus the preliminary estimate of 55.1. The composite index arrived at 57.1, the highest since February 2018. Employment conditions were also seen improving for the fourth month. Germany’s final service PMI came in at 52.8, in line with the preliminary estimate.
Elsewhere, the German Economy Minister, Peter Altmaier, said the economy can reach GDP growth of up to 4% this year, and the country has put the worst of the coronavirus pandemic behind it. However, the comments and upbeat European data failed to provide any meaningful impetus to regional markets.
Against this backdrop, the UK FTSE 100 sheds 0.72% to 7,056, Italy’s FTSE MIB loses 0.01% to 25,377, France’s CAC 40 is down by 0.11% to 6,514, while the German DAX 30 declines by 0.16% to 15,578. US stock index futures are edging down ahead of jobless claims data due later today.
In currencies, the USD index regained upside momentum as the US 10-year yields crept back to the 1.60% region. As such, the greenback resumes the upside above the 90.00 mark amid a generalized cautious mood among investors ahead of US data releases. Also, a better tone surrounding the dollar reflects the upbeat view from the Fed’s Beige Book, as the central bank’s officials highlighted that the economy expanded at a moderate pace over the last few weeks.
As dollar demand picked up again, EURUSD came back under pressure to challenge the 20-DMA in recent trading. If this moving average that arrives at 1.2180 gives up any time soon, the 1.2160 area will come back into market focus. Later in the day, traders will closely follow the publication of the ADP report and weekly initial claims ahead of Friday’s crucial nonfarm payrolls. Strong figures could add to bullish impetus surrounding the dollar and thus send the pair lower ahead of the weekend.
Nathan Lambert, Head of Global FX Analytical Department