Following a rally in Asia, European stocks opened higher on Tuesday despite the turmoil in vaccine rollouts in the region after several countries decided to suspend the AstraZeneca vaccine, citing safety fears. Treasury yields were steady ahead of the Federal Reserve’s policy statement due on Wednesday. The yield on 10-year Treasuries fell one basis point to 1.60% in recent trading. The upcoming meeting will include fresh economic and interest-rate projections. Also, the Bank of England rate decision is scheduled for Thursday. The central bank is expected to leave monetary policy unchanged. Bank of Japan monetary policy decision is due on Friday.
Against this backdrop, the FTSE 100 in London gains 0.72% to 6,798, Italy’s FTSE MIB adds 0.63 percent to 24,291, France’s CAC 40 is up by just 0.03% to 6,037, while the German DAX 30 is 0.37% higher, at 14,514. US stock index futures flat after major indexes hit fresh record highs on Monday.
In currencies, the dollar looks steady ahead of the US retail sales data due later today, with the prospects for a faster US economic recovery from the pandemic underpinning the greenback. The USD/JPY pair consolidates its recent gains to multi-month highs and remains in a range, comfortably above the 109.00 figure that represents the immediate support for the time being as traders await fresh catalyst from this week's key central bank events.
As for EURUSD, the pair climbed to the flat-line in recent trading as the dollar ascent has slowed. However, the common currency remains on the defensive despite staying above the 1.1900 figure these days. Vaccination developments in Europe curb the euro’s appeal. Now, market focus is shifting toward the FOMC meeting minutes. By the way, if the central bank strikes a neutral tone on rising yields and the outlook for inflation, market reaction to the meeting could be muted.
Meanwhile, oil prices struggle to regain upside impetus following yesterday’s rejection from the $70 barrier. Brent crude is clinging to the $68 figure ahead of fresh economic data out of the United States including the API report due later today. Bearish figures on crude oil inventories could add to the negative pressure surrounding the oil futures. A relatively strong dollar caps potential gains in the market as well.
Nathan Lambert, Head of Global FX Analytical Department