European stocks lack directional impetus on Monday but still hovering close to all-time highs amid growing optimism surrounding economic recovery in the region. Global investors are in a cautious mood ahead of U.S. inflation data and a European Central Bank meeting later this week.
Data showed German industrial orders dropped unexpectedly in April while the Eurozone investor confidence rose for the fourth month in a row in June, reaching its highest level since February 2018. Sentix’s index climbed to 28.1 from 21.0 in May versus 26.0 expected. On Friday, the US Labor Department reported 559,000 new nonfarm jobs were created in May, less than expected. Over the weekend, Treasury Secretary Janet Yellen suggested higher interest rates would be a plus if the result of strong economic growth.
Against this backdrop, the UK FTSE 100 gains 0.15% to 7,079, Italy’s FTSE MIB adds 0.57% to 25,716, France’s CAC 40 is flat at 6,515, while the German DAX 30 is flat at 15,691. US stock index futures are falling slightly to start the week.
In currencies, the greenback is steady on Monday after a sell-off seen across the board ahead of the weekend. EURUSD managed to bounce from the 1.2100 figure but failed to overcome the 20-DMA around 1.2170 earlier in the day, suggesting the pair lacks recovery momentum at this stage, with short-term downside risks persisting ahead of US CPI report that could send the common currency lower. On the upside, a decisive break above the mentioned 20-DMA would pave the way towards 1.2200. Despite the current correction, the overall technical picture remains upbeat.
Meanwhile, Brent crude reversed south around fresh more than two-year highs to proceed to a technical correction following a five-day winning streak seen last week. Oil prices peaked at $72.25 before retreating to $71.10 earlier in the day. Of note, the futures managed to bounce from intraday lows to trim losses during the European hours, suggesting the downside potential could be limited in the short term. However, should dollar demand pick up, Brent crude could see more losses in the coming days.
Nathan Lambert, Head of Global FX Analytical Department