European equity markets advanced on Monday after Britain and the EU agreed on Sunday to keep negotiating over a Brexit trade deal. However, U.K. Prime Minister Boris Johnson still warned businesses to be ready for a no-deal exit on December 31 when the transition period ends. On the negative side, Germany is reportedly to go into a full lockdown over the Christmas period amid a rise in coronavirus deaths and infections in the country. Elsewhere, South Korea has said tighter restrictions may be inevitable while health workers in Sweden are quitting in record numbers. As a reminder, U.S. regulators voted to approve the Pfizer-BioNTech vaccine on Friday.
Against this backdrop, the UK FTSE 100 index adds 0.31% to 6,566, Italy’s FTSE MIB gains 0.90 percent to 21,898, France’s CAC 40 is up by 0.64% to 5,542, while the German DAX 30 rises by 0.66% to 13,200. US stock index futures moved higher early Monday as indexes indicated a rebound after a modest decline witnessed late last week, with investors further weighing updates on the coronavirus stimulus talks in Washington.
In currencies, the dollar is back under pressure against major counterparts as risk-on one dominates stock markets on Monday. EURUSD bounced from the 1.2100 handle but has once again encountered local resistance in the 1.2160 area. Despite the common currency refrains from challenging fresh long-term tops, the overall technical picture remains constructive, both in the short- and longer-term as the dollar remains within a broader bearish trend.
The pound rebounded from one-month lows seen on Friday. GBPUSD has regained the 20-DMA and now needs to confirm a break above the 1.3400 figure in the near term. The pair could climb to fresh highs if the remaining ussies in Brexit talks are resolved while a no-deal divorce would send the British currency lower. In the immediate term, GBPUSD will likely stay afloat as the greenback remains under pressure.
Meanwhile, oil prices have settled above the $50 handle on Monday but still refrain from a more robust ascent to the $51 figure seen last week. On the positive side, vaccine expectations continue to support the market while the lack of progress towards the Brexit deal and fiscal stimulus measures in Washington cap gains. From the technical point of view, the futures could see another bull run towards long-term tops if traders receive the additional bullish catalyst in the short term.
Nathan Lambert, Head of Global FX Analytical Department