Following mixed trading in Asia, European stocks opened marginally lower on Tuesday after posting their best session in four months. It looks like investors have already digested the Senate’s passing of a $1.9-trillion economic relief and stimulus bill on Saturday. President Joe Biden is expected to sign the bill before key unemployment programs expire on Sunday. As US Treasury yields continue to retreat, investor sentiment could improve further during the day.
Meanwhile, French Finance Minister Bruno Le Maire said the economy will surprise the rest of the Eurozone economy this year in its capacity to rebound. He also added that the economy will quickly recover once current restrictions are lifted. Elsewhere, the European Central Bank Governing Council member Francois Villeroy said that 2021 economic growth in France should be one of the strongest in Europe.
Against this backdrop, the FTSE 100 in London gains 0.20% to 6,732, Italy’s FTSE MIB adds 0.63 percent to 23,830, France’s CAC 40 is down by 0.01% to 5,902, while the German DAX 30 is 0.20% lower, at 14,351. US stock index futures point to a modest recovery in stocks following the recent losses.
In currencies, the dollar retreats further amid lower bond yields and some USD profit-taking on Tuesday. As such, USDJPY is correcting from multi-week tops, sliding to daily lows around 108.55. as a reminder, US Treasury Secretary Janet Yellen said on Monday that a massive US stimulus package would provide enough resources to fuel a very strong US economic recovery. She also added that there are tools to deal with inflation, which prompted a pullback in the US bond yields, pressuring the greenback.
EURUSD slipped to fresh lows around 1.1835 earlier in the day before bouncing in recent trading. As a result, the euro surged to the 1.1900 figure, a decisive break above which would pave the way to a more robust recovery. However, as worries about rising yields persist, the downside potential surrounding the safe-haven dollar will likely be limited in the coming days. Furthermore, the greenback could regain a bullish bias and climb to fresh 3.5-month highs if bind yields surge again.
In commodities, oil prices failed to extend the rally yesterday and retreated as a result. On Tuesday, Brent crude bounced but failed to regain the $69 figure earlier in the day. The futures are rising on expectations of a recovery in the global economy after the U.S. Senate approved a $1.9-trillion stimulus bill. On the other hand, receding fears of a supply disruption from Saudi Arabia after an attack on its export facilities capped price gains.
Nathan Lambert, Head of Global FX Analytical Department