Following gains on Wall Street, European stock markets traded higher on Friday amid the reports about fruitful negotiations between the top negotiators in the US and China. The two parties promised to create favorable conditions for a phase one trade deal. As for the data, German exports declined 12% in March, a much sharper drop than expected. It was the steepest drop in German exports since records began in 1990.
Against this backdrop, UK’s FTSE 100 gains 1.40 percent to 5,935, Italy’s FTSE MIB adds 1.05 percent to 17,339. France’s CAC 40 rises by 0.78 percent to 4,536, while German DAX 30 adds 1.12 percent to 10,879. U.S. stock index futures are rising ahead of the April U.S. nonfarm payrolls data which is expected to show the economy lost over 20 million jobs. As a reminder, the report on Thursday showed that more than 33 million Americans have filed for unemployment benefits over the seven-week period ending May 2.
The greenback is directionless ahead of the key employment report. EURUSD and GBPUSD are trading marginally higher on the day but the recovery impetus remains weak. The euro struggles to get back above the 1.09 handle. in her recent statement, the ECB president Christine Lagarde said that the central bank will play full part within the mandate to help the economy. Later today, UK PM Johnson will speak with EU's von der Leyen on coronavirus response. Comments from this front could bring some volatility in the GBPUSD pair. The pound has settled just above the 1.23 handle, struggling to overcome the 50-DMA.
Elsewhere, oil prices are making shallow recovery attempts after another pullback from local highs. Brent is now back under the $30 handle, and it looks like the futures may turn negative on the daily charts if traders won’t push the barrel above the psychological level any time soon. In part, oil traders are cautious ahead of the important job market data out of the US. Fundamentally, the picture in the global oil market remains gloomy as demand is weakening, and the world economy is on the brink of recession.
Meanwhile, gold prices are holding above the $1,700 figure after yesterday’s rally. Later in the day, the precious metal could receive a boost from the potentially disappointing US jobs data. To confirm the latest breakout, the bullion needs to see a daily close above the $1,720 region. On the downside, the mentioned psychological level acts as a meaningful support area.
Nathan Lambert, Head of Global FX Analytical Department