European equities edged higher on Friday ahead of a US jobs data. Investors expect the non-farm payrolls report to show that 1 million jobs were created last month. As a reminder, Atlanta Fed president Bostic said on Thursday that such a reading would not persuade the central bank to reduce its monthly bond purchases.
Earlier in the day, Asian stocks were mixed, with Chinese shares were down amid trade tensions with the United States and a worsening pandemic situation in the region including not only India and Japan, but also South Korea, Vietnam, Taiwan, and Singapore. Of note, India saw a record rise of 414,188 daily COVID-19 infections in the past 24 hours.
Elsewhere, the European Union on Thursday supported talks over waiving patent protections for Covid-19 vaccines. Meanwhile, Germany’s Health Minister Jens Spahn said the third wave of coronavirus appears to be broken. The ECB policymaker Martins Kazaks said that a decision to slow bond purchases is possible in June. ECB president Lagarde to speak later in the day.
On the data front, German exports grew 1.2% in March to notch an eleventh consecutive month of expansion. Industrial output in the country grew 2.5% month-on-month. French industrial output grew 0.8% in March. In the UK, April construction PMI arrived at 61.6 versus 62.1 expected.
Against this backdrop, the UK FTSE 100 gains 0.53% to 7,113, Italy’s FTSE MIB sheds 0.04% to 24,483, France’s CAC 40 is up by just 0.03% to 6,359, while the German DAX 30 advances 1.00% to 15,349. US stock index futures are edging higher ahead of the opening bell. Overnight, Dow Jones hit a record high while the Nasdaq rebounded for slim gains after tumbling intraday.
In currencies, the dollar is mostly lower ahead of the key employment data. EURUSD climbed back above the key moving averages, targeting the 1.2100 figure again. However, a decisive break above this level looks unlikely in the short term as the greenback could gain later today if the jobs report surprises on the upside. Supporting the upside momentum in the common currency appears the improvement in yields of the German 10-year Bund and the recent activity in the futures markets along with the better mood in the risk complex.
Nathan Lambert, Head of Global FX Analytical Department