European markets edge higher on Friday after the UK lawmakers voted to delay Brexit for at least three months, which brought some relief to the regional investors. Now, the Prime Minister Theresa May is preparing once more to try and win approval for her twice-rejected Brexit deal. The sentiment has also improved on a report that more progress has been made in talks between the US and China. By the way, US secretary of state, Mike Pompeo, said that Trump and Xi might meet in mid-April or later. Meanwhile, Trump earlier said that we're all going to know what happens next in trade talks «over the next 3-4 weeks».
Against this backdrop, Britain’s FTSE 100 adds 0.64 per cent to 7,231, France’s CAC 40 is up 0.91 per cent to 5,398, while German DAX 30 rises by 0.90 per cent to 11,691. US stock index futures also see a nudge higher with Dow set to rise over 100 points on rising hopes for US-China trade deal.
The improved risk sentiment discouraged dollar bulls on Friday after yesterday’s rally. EURUSD is back in the upper end of the weekly range and is flirting with the critical resistance area around 1.1330, with daily highs lie around 1.1330. The euro is recovering the losses sustained on Thursday. Eurozone CPI came in at 1.5% and Core CPI gained 1.0%, as both readings matched their estimates. There were no surprises from February data, with German CPI was within expectations as well. At the same time, consumer prices remain below the ECB target of around 2 percent, which suggests the central bank won’t hike rates this year. Technically, the pair needs to confirm a recovery above the 1.13 threshold to challenge this week’s highs around 1.1340. But despite dollar weakness, the euro will hardly be able to break this resistance in the short term.
GBPUSD is also recovering after yesterday’s rejection from highs around 1.3380. The pair seems to have found bids around 1.32 but struggles to resume a convincing impetus as markets digest the aftermath of the Brexit votes this week. There are unconfirmed reports that the DUP is considering to support the government's deal. Due to a lack of relevant economic data from the UK, traders will continue to monitor Brexit developments that will further drive the pair. From the technical point of view, the cable needs to hold above the 1.32 support area to overcome the 1.33 barrier once again. In the short term, the outlook for the pair looks neutral as long as the pound is trading below the 1.3270 area.
Crude oil prices struggle to resume the rally after a brief spike above the $68 figure yesterday. The barrel failed to cling to the $67 mark earlier in the day and turned negative, trading marginally above the $66.50 handle. The general picture in the oil market remains quite positive and the current correction is mostly due to some profit-taking ahead of the weekend. Also, there are still concerns over demand growth, which caps the upside potential in the market. Nevertheless, the prices are staying not far from 2019 highs and will likely remain further supported by OPEC-led cuts, US sanctions and signs of slowing activity in the US shale fields.
Nathan Lambert, Head of Global FX Analytical Department