European markets are trading in a mixed manner on Wednesday, looking for direction as Chinese growth came in a bit higher than expected but in general failed to impress investors in a thin preholiday market. China’s economy grew 6.4% year over year in the first quarter, higher than the consensus of 6.3%. Industrial production and retail sales data came in higher than expected as well, easing concerns over global growth. At the same time, investors are cautious ahead of European corporate earnings. As for the data, the UK data showed a mixed picture. The producer prices rose 2.4% versus 2.1% expected, while house price index saw an increase of just 0.6%, after January’s 1.7% jump.
Against this backdrop, Britain’s FTSE 100 sheds 0.09% to 7,463, France’s CAC 40 is up 0.28 percent to 5,543, while German DAX 30 adds 0.40% to 12,150. US stock index futures are generally higher on upbeat Chinese data but the bullish momentum is limited due to disappointing quarterly reports from Netflix and IBM.
EURUSD is getting off the daily highs above 1.13 registered earlier in the day as risk sentiment looks mixed after the initial spike. The European Central Bank Governing Council member Ewald Nowotny said that the ECB is unlikely to cut the economic forecasts in June. He also noted that it is not yet the time for the Governing Council to introduce tiering on rates. Meanwhile, German government officially cut 2019 GDP growth forecast to 0.5% from 1.0%. At the same time, the government expects economy to rebound in 2020, and the GDP growth forecast for the year comes at 1.5%. In general, traders were prepared for such an outcome but the common currency felt some downside pressure anyway. EURUSD is still decently higher on the day and will likely preserve the bullish bias in the short term as dollar demand remains subdued.
USDJPY briefly jumped above the 112.00 barrier during the Asian session but failed to sustain the momentum as China-inspired risk-on sentiment started to abate. Considering that the pair remains around the above mentioned psychological level and refrains from a deeper pullback, traders are probably waiting for a catalyst to break higher and confirm the bullish bias. The pair retains the neutral-to-bullish stance in the short term but to keep the momentum it needs to firmly break above 112.00 and refresh 2019 highs above 112.20. As investor sentiment in the global financial markets looks unsteady, the upside risks for the pair remain limited.
Brent rallied to fresh November highs above $72 during the morning trading on Wednesday and since then oscillates around this level, struggling for direction. Strong Chinese data reassured investors and pushed oil markets higher on easing concerns over global demand. Additionally, the API data showed that crude oil inventories declined unexpectedly 3.1 million barrels in the week ended April 12. Also, OPEC supply cuts and U.S. sanctions on Iran and Venezuela continue to support oil prices. Moreover, according to tanker data, Iran’s crude exports have dropped in April to their lowest daily level this year. In this environment, Brent may extend the rally on supply concerns even as the futures are looking overbought already.
Nathan Lambert, Head of Global FX Analytical Department