European equities edged lower Tuesday, as investors took a pause after a rally fueled earlier by upbeat vaccine news from Moderna. The optimism waned amid uncertainty surrounding the vaccine production and delivery and further rise in virus cases globally, with hospitalizations in the U.S. reaching a fresh record at the start of the week while many European countries resorting to partial lockdowns.
Of note, Germany's Merkel, who is trying to push for tighter restrictions to be introduced across the country, highlighted today that virus cases were not falling as fast as they expected. Furthermore, the World Health Organization Director-General Tedros Adhanom Ghebreyesus said that many questions remained and it was no time for complacency despite the COVID-19 vaccine news.
Against this backdrop, the UK FTSE 100 index sheds 0.55% to 6,385, Italy’s FTSE MIB adds 0.39 percent to 21,400, France’s CAC 40 edges lower by 0.13 percent to 5,464, while the German DAX 30 sheds 0.11% to 13,123. Meanwhile, US stock index futures also point to a lower open after a rally seen overnight.
In currencies, the dollar keeps slightly softer on the session but the key technical levels still holding up as the pressure looks limited, with trading activity being muted and risk slightly on the back foot. EURUSD climbed to fresh one-week highs in the 1.1875 area, but still struggling to overcome the 1.1900 handle. The euro has been rising for the fourth day in a row already, and should the bullish bias persist in the short term, the mentioned resistance could be challenged. On the other hand, the unstable risk sentiment will likely cap positive momentum and could even send the prices lower from the current levels if high-yielding assets stay on the defensive.
In commodities, oil prices have settled marginally below the $44 handle on Tuesday after a rejection from yesterday’s highs in the $44.65 area. The OPEC+ officials signaled their readiness to prolong output cuts for three-to-six months but the news failed to trigger a rally in the market as oil prices continue to follow coronavirus developments, with rising cases in Europe and the United States capping positive momentum in risky assets including Brent.
Meanwhile, gold prices turned marginally negative on the day after three days of gains. The precious metal is still capped by the 20- and 100-DMAs representing the key short-term resistance levels. As of writing, the bullion was changing hands around $1,887. On the downside, the $1,860 figure remains in focus. As long as the prices stay above this level, bearish risks are limited.
Nathan Lambert, Head of Global FX Analytical Department