Europe markets are trading mixed on Thursday as a Brexit extension failed to give a positive impact on investors. The EU leaders agreed to delay Brexit for up to six months. According to the president of the European Council Donald Tusk, this development provides extra time for the “U.K. to find the best possible solution.” Positive sentiment is capped by yesterday’s ECB warning about the remaining threats to world economic growth. Meanwhile, in the minutes from its latest meeting, the Federal Reserve said they had agreed to be patient about any changes to interest rate policy.
Against this backdrop, Britain’s FTSE 100 adds 0.11 percent to 7,430, France’s CAC 40 is up 0.60 percent to 5,482, while German DAX 30 adds 0.18% to 11,927. US stock index futures are slightly lower on Wednesday as investors continue to digest the FOMC meeting minutes.
The dollar was marginally lower against the majors earlier in the day but then recovered slightly, with the overall trading activity is muted on Thursday. EURUSD still struggles to get back above the 1.13 barrier as the main source of a relative euro strength is a weaker dollar demand. The FOMC March meeting’s minutes underscored the Fed’s patience stance, with no rate hikes seen this year, which put some pressure on the greenback. But in general, market participants were ready for such an outcome, so the minutes was largely a non-event.
The risk for the common currency is the threat of US tariffs on the EU, as well as global economic slowdown concerns. Moderate risk aversion also caps the bullish attempts in the pair. Technically, downside risks still prevail for the euro despite the recent rebound.
USDJPY is making shallow recovery attempts after three days of losses. The pair struggled to reach the 112.00 barrier earlier in the week and has been trading mostly lower since then. At the same time, earlier attempts to break below the 100-DMA on several occasions brought back buyers into play, with the prices are trying to cling to the 111.00 mark. In a wider picture, the controversial investor sentiment makes the pair struggle for direction at this stage but the bearish risks prevail as long as the greenback remains below the 112.00 threshold.
In commodities, crude oil prices are retreating from fresh 2019 highs at $71.75, registered on Wednesday. After the recent rally, there is scope for some profit taking but considering the limited nature of the ongoing correction, the bullish trend will remain intact for now. According to the Energy Information Administration, U.S. crude oil inventories rose last week, marking its third-consecutive week of stockpile builds and its second-straight surge of more than 7 million barrels. Meanwhile, gasoline inventories plunged by 7.71 million barrels, compared to expectations for a draw of 2 million barrels, which helped to outweigh the negative impact from an unexpected rise in crude oil stockpiles. In the short term, Brent will likely remain under a mild pressure, with the market needs additional catalysts to refresh highs.
Nathan Lambert, Head of Global FX Analytical Department