European stocks were marginally higher on Tuesday after the European Union announced plans to reopen its borders to tourists after months of restrictions. The announcement helped to lift investor hopes of a more robust economic recovery from the pandemic. Overnight, Federal Reserve Chairman Jerome Powell said the economic outlook has clearly brightened in the United States, but the economy was not out of the woods yet.
On the data front, the seasonally adjusted Markit/CIPS UK manufacturing PMI was revised higher to 60.9 in April versus 60.7 expected and 60.7 first estimate. UK March mortgage approvals arrived at 82.7k versus 86.5k expected and 87.7k prior. The report showed that mortgage approvals ease slightly compared to February but are still keeping generally higher.
Against this backdrop, the UK FTSE 100 gains 0.60% to 7,011, Italy’s FTSE MIB adds just 0.02% to 24,427, France’s CAC 40 is up by 0.24% to 6,322, while the German DAX 30 sheds 0.66% to 15,135. US stock index futures slipped on Tuesday as technology shares continued to weigh on equities.
In currencies, the greenback is back on the offensive across the board following losses seen yesterday. The resurgent demand for the dollar sent EURUSD below the 20-DMA for the first time in a month. At the beginning of the week, the common currency was lifted by comments from ECB’s Vice-President De Guindos, who said that the central bank could start phasing out current stimulus measures once the vaccine rollout picks up sustained pace. However, the pair failed to preserve gains as greenback resumes the ascent on Tuesday. Now, the pair needs to hold above the 1.2000 figure in order to avoid deeper losses in the short term.
Elsewhere, oil prices rallied to mid-March highs just below the $69 figure in recent trading despite dollar strength. It looks like traders continue to bet on a stronger recovery in energy demand, citing upbeat economic data out of major economies. If the upside pressure intensifies any time soon, Brent crude could regain the $70 figure in the coming days. However, considering rising virus cases in India, the current rally could fade quickly and switch into another bearish correction.
Nathan Lambert, Head of Global FX Analytical Department