European stocks are trading lower on Wednesday while staying close to all-time highs ahead of the ECB meeting and US CPI data due tomorrow. Awaiting these events, investors prefer to keep a cautious tone. On the data front, China’s producer price index jumped 9% from a year earlier in May, the fastest increase since 2008. However, the headline consumer price index rose 1.3%, lower than expected. In Europe, the German trade surplus expanded to 15.9 billion euros in April from14.3 billion euros while the current account surplus shrank to 21.3 billion euros during the same period from 30.0 billion euros.
Elsewhere, a Chinese Foreign Ministry spokesman said that the US must stop promoting a bill aimed at boosting its ability to compete with Chinese technology. He also urged the United States to adopt the correct attitude, and avoid damaging overall Sino-U.S. relations and cooperation in important areas.
Against this backdrop, the UK FTSE 100 sheds 0.59% to 7,052, Italy’s FTSE MIB loses 0.11% to 25,780, France’s CAC 40 rises by 0.03% to 6,553, while the German DAX 30 sheds 0.36% 15,584. US stock index futures are nearly flat ahead of the opening bell on Wednesday.
As 10-year yields are down 2.2 bps currently to 1.51%, the dollar came under pressure on Wednesday following short-lived gains seen yesterday. As such, the euro gains traction, approaching the 1.2200 figure as markets get closer to the key ECB meeting on Thursday. As no tapering is expected, the impact on EUR/USD should be limited. A daily close above the 20-DMA would mark some improvement in the short-term technical picture.
Meanwhile, Brent crude extended the rally to $72.80 earlier in the day before retreating marginally. Traders continue to price in further recovery in the global energy demand, also deriving support from a generally weak dollar. In recent trading, oil prices trimmed gains after Iran said that most oil output can be restored in one month of sanctions ease. The National Iranian Oil Company also said that Shana to fully restore oil output three months after sanctions removal.
Elsewhere, bitcoin price bounced from the $31,000 figure on Tuesday to turn marginally positive today. The leading digital currency by market capitalization was last seen flirting with the $34,000 handle while still staying below the descending 20-DMA that arrives at $36,300. In a wider picture, a crucial resistance arrives at $38,000, followed by the $40,000 figure.
Nathan Lambert, Head of Global FX Analytical Department