The U.S. Federal Reserve signaled that it was in no hurry to tighten its monetary policy, minutes of the central bank’s latest policy meeting released on Wednesday showed. The central bank’s dovish stance was welcomed by global investors, sending European stocks to all-time highs on Thursday. Due to this, market players shrugged off the news that several European countries had announced restrictions on the use of AstraZeneca’s COVID-19 vaccine after a link was found to very rare blood clots.
Elsewhere, the ECB chief economist, Philip Lane, noted that favorable financing conditions must be maintained. He also said that inflation is significantly volatile amid the pandemic, but it remains low overall, with prices being driven by several special factors at the moment. In Spain, the economy minister said the country was on track to vaccinate 70% of population by the summer.
On the data front, Germany's March construction PMI arrived at 47.5 versus 41.0 prior. In the Eurozone, February PPI came in at +0.5% versus +0.6% m/m expected. UK March construction PMI arrived at 61.7 versus 55.0 expected.
Against this backdrop, the FTSE 100 in London gains 0.13% to 6,894, Italy’s FTSE MIB gains 0.01% to 24,743, France’s CAC 40 is up by 0.53% to 6,162, while the German DAX 30 edges just 0.07% higher to 15,187. US stock index futures signal further gains to fresh all-time highs. Fed Chair Jerome Powell is due to speak later today at an International Monetary Fund event.
In currencies, the dollar is back under some pressure following failed reversal attempts seen yesterday as risk-on tone persists while Treasury yields continue to retreat further from recent peaks. As such, EURUSD turned marginally positive on the day while staying below the 100-DMA after a brief rally above 1.1900 that faded quickly. Later in the day, the ECB’s Accounts of the March meeting will be in focus along with US jobless claims data.
In commodities, Brent crude is flat just below the $63 figure following modest gains seen on Wednesday. The Energy Information Administration reported a crude oil inventory draw of 3.5 million barrels for the week to April 2 along with a hefty gasoline stock increase and a build in distillates. A day earlier, the American Petroleum Institute had estimated a crude oil inventory draw of 2.62 million barrels. Now, the futures struggle to overcome the $63 figure amid the ongoing concerns over the outlook for recovery in global demand.
Nathan Lambert, Head of Global FX Analytical Department