European stock markets are cautiously higher on Monday after U.S. President Donald Trump signed four executive orders over the weekend, including one that extends federal unemployment benefits at a rate of $400 a week. However, the risk-on tone is capped by the reports that China vowed to sanction American officials in a tit-for-tat response to the U.S. for sanctioning Chinese officials and their allies in Hong Kong. On the data front, Eurozone August Sentix investor confidence came in at -13.4 versus -15.1 expected. Despite the result was slightly better than expected, stocks failed to capitalize from the release as confidence remained weak anyway.
Against this backdrop, the UK’s FTSE 100 gains 0.42 percent to 6,057. Italy’s FTSE MIB edges higher by 0.48 percent to 19,612, France’s CAC 40 adds 0.37 percent to 4,908, while German DAX 30 adds just 0.06 percent to 12,683. U.S. stock index futures are edging marginally higher after Trump’s decision on supportive measures amid the coronavirus pandemic.
In currencies, the euro remains under some selling pressure following a retreat witnessed on Friday. However, the bearish momentum looks limited as the EURUSD pair shifted into a consolidative mode in recent trading, having settled around 1.1760 after a dip to four-day lows in the 1.1750 area. If the downside pressure surrounding the greenback continues to ease in the days to come, the pair may retreat further but so far, the bullish trend remains intact.
USDJPY has climbed to the 106.00 figure during the European hours where the 20-DMA continues to cap the recovery momentum. At the same time, as the dollar looks strongly oversold, the pair could continue the rebound and surpass the mentioned moving average if risk sentiment remains positive ahead of the US-China trade talks scheduled for August 15. On the downside, the immediate support arrives at 105.70.
In commodities, Brent crude is little changed on Monday, having settled marginally below the $45 immediate barrier. The futures keep afloat amid a mildly positive risk tone while rising US-China tensions continue to cap the bullish potential in the market. The fact that Brent failed to confirm a break above $46 last week, suggests that downside risks continue to prevail in the market, especially amid weak economic data out of major countries. Should the prices struggle to get back above $45 any time soon, bearish momentum could send the futures to the $44.2o area.
Nathan Lambert, Head of Global FX Analytical Department