European markets are trading higher on Monday as the rate of new coronavirus infections and deaths is slowing on the continent. Italy reported its lowest daily virus death toll for more than two weeks on Sunday while Germany reported a slowdown in the rate of new cases for the third day in a row. In Spain, the rate of new infections and deaths continued to decline as well. Meanwhile, the British government has warned that the worst of the virus is yet to come with an expected peak on Easter Sunday. By the way, Prime Minister Boris Johnson was admitted to a hospital for tests Sunday.
Against this backdrop, UK’s FTSE 100 adds 2.20 percent to 5,534, Italy’s FTSE MIB gains 2.99 percent to 16,873. France’s CAC 40 rises by 3.80 percent to 4,312, while German DAX 30 rallies by 4.53 percent to 9,957. U.S. stock index futures are pointing to a positive open amid further signs of slowing in the spread of coronavirus not only in Europe but in New York. On the other hand, last week's US job numbers showed that the virus is hurting the global economy hard, and the worst still to come.
Meanwhile, dollar demand remains relatively robust on Monday, with USDJPY regaining the 109.00 handle as risk-on tone prevails in the financial markets. The pair has climbed back above the 100-DMA that acted as the intermediate resistance and now, the prices need to challenge the 109.40 figure so that to retarget the 110.00 level. However, as investor optimism remains fragile, risk aversion may reemerge at any point, suggesting the dollar could retreat below 109.00.
EURUSD failed to challenge the 1.0835 and retreated into the negative territory, remaining far below the key moving averages as the euro is still on the defensive despite some positive virus-related headlines. Germany's Interior Ministry said on Monday that the easing of restrictions can come if the infection rate is below 1 but the reports did little to ease the selling pressure surrounding the euro as well. Now, the pair is flirting with the 1.08 figure, a daily close below which will confirm the bearish sentiment towards the single currency.
In commodities, crude oil declined after OPEC and Russia postponed a meeting that could reduce a supply glut and thus lift prices from their lowest levels in decades. The meeting is now scheduled for Thursday. Ahead of this event, the market volatility will persist, and the upside potential will likely be limited. After an earlier jump to $34, Brent crude trimmed gains but still clings to the $33 handle ahead of the opening bell on Wall Street.
Nathan Lambert, Head of Global FX Analytical Department