European equities edged lower at the open on Monday, easing from all-time highs amid negative coronavirus developments in the region. However, some regional indexes managed to reenter positive territory in recent trading. In Germany, the BDI slashed the economic growth forecasts for this year to 3% from 3.5%, citing the ongoing lockdown measures in the country. On the positive side, the UK has allowed non-essential shops to reopen starting from today.
On the data front, the Eurozone February retail sales came in at 3.0% versus +1.7% m/m expected. Elsewhere, the European Commission imposed provisional tariffs on aluminum flat-rolled products from China after an initial investigation found the Chinese products were being sold into the bloc at artificially low prices.
Against this backdrop, the FTSE 100 in London sheds 0.30% to 6,894, Italy’s FTSE MIB gains 0.44% to 24,535, France’s CAC 40 is up by 0.12% to 6,176, while the German DAX 30 edges just 0.09% higher to 15,248. US stock index futures point to a negative open on Wall Street.
Meanwhile, the dollar looks mixed while trending mostly lower during the European hours. Initially, EURUSD failed to break above the 1.1900 figure but turned positive in recent trading. Later in the week, the pair could see deeper losses if the US inflation data surprises on the upside. In the immediate term, the common currency needs to confirm a break above 1.1900 on a daily closing basis. Otherwise, the 20-DMA will come back into market focus.
USDJPY continued losing ground through the first half of the European session. The pair was rejected from the 109.75 area before easing to109.30 as dollar demand continued to ease following the initial bullish attempts in Asia. The pair continues to struggle for direction as long as the prices oscillate around the 20-DMA, today at 109.50.
In commodities, oil prices managed to bounce from intraday lows to turn green during the European hours. Brent crude has touched the 20-DMA for the first time since the plunge seen on March 18. If the futures manage to overcome this barrier in the short term, the technical picture would improve somehow. However, the prices may lack the impetus to make the breakout as concerns over the outlook for energy demand recovery persist amid rising coronavirus cases both in Europe and Asia.
Nathan Lambert, Head of Global FX Analytical Department