European stock markets are trading marginally higher on Friday, as global sentiment remains mainly positive amid the de-escalation in the US-Iran tensions and also on expectations of а phase one deal between Washington and Beijing. Chinese Vice Premier Liu He is due to sign an initial phase one trade deal with the U.S. next week. By the way, due to these two drivers, MSCI’s broadest index of international share markets hit an all-time high and rose 0.6% in today’s trading session. Meanwhile, U.K. lawmakers approved legislation that will allow the country to exit the EU late this month with a withdrawal deal.
Against this backdrop, UK’s FTSE 100 adds 0.01 per cent to 7,599, Italy’s FTSE MIB gains 0.44 per cent to 24,123, France’s CAC 40 rises by 0.08 per cent to 6,047, while German DAX 30 adds 0.35 per cent to 13,542. U.S. stock index futures point to a higher open, as markets continue to rally on the back of easing tensions in the Middle East.
In currencies, the EURUSD pair turned negative again after a flat dynamics yesterday. The prices failed to regain the 1.11 handle and registered fresh two-week lows around 1.1085. The euro is cautious ahead of the key US employment data due later today. Should the report point to strong jobs and wages growth, the common currency may face an even more intense selling pressure and threaten the 100-DMA for the first time in a month. From the technical point of view, the risks remain skewed to the downside as long as the prices stay below at least the 200-DMA around 1.1140. In the near term, the single currency needs to firmly regain the 1.11 level in order to see a less intense selling pressure.
In commodities, Brent crude turned marginally positive on the day but still remains close to the lower end of the range. Prices are holding above the $65 level which serves as the immediate support zone. As the futures derived this handle previously, downside risks still prevail at this stage. However, as traders start to shift focus from geopolitics to the trade deal due to be signed next week, the sentiment in the market could improve and push Brent higher from one-month lows. On the upside, the immediate target comes around the $66 figure. Only a firm break and a weekly close above this level will suggest the selling pressure is easing. In a wider picture, much depends on geopolitics, as the renewed tensions between the United States and Iran could cause another rally in a fairly volatile oil market.
Nathan Lambert, Head of Global FX Analytical Department