European stocks struggle for direction on Friday, as renewed concerns over the second wave of coronavirus pandemic caps bullish attempts in the market after the World Health Organization warned of an alarming rise in coronavirus cases in the region. In Spain, the government is expected to announce new restrictions on Friday to try and curb the outbreak. Germany reported 2,179 new COVID-19 cases today while UK's Health Secretary noted that the virus was accelerating across the country.
On the data front, Germany PPI came in at 0.0% in August, in line with expectations. In the UK, retail sales came in at 0.6% in August versus 0.7% m/m expected. Eurozone July current account balance arrived at €25.5 billion versus €17.3 billion prior.
Against this backdrop, the UK FTSE 100 index edges lower by 0.17% to 6,052, Italy’s FTSE MIB sheds 0.15 percent to 19,710, France’s CAC 40 declines by 0.12 percent to 5,033, while German DAX 30 gains 0.37% to 13,256. U.S. stock index futures fluctuate as investors are searched for new catalysts to give direction to global markets on the last trading session of the week.
In currencies, the dollar is flat against major counterparts on Friday after the recent weakness. EURUSD has settled around the 20-DMA, being unaffected by fresh economic data out of Germany and the Eurozone. The common currency remains close to long-term highs these days but the pressure could reemerge in the days to come should the coronavirus developments in Europe continue to deteriorate further. If so, the pair will first retreat below 1.18 and then derail the 1.17 level for the first time since early-August.
Meanwhile, USDJPY continues to lose ground on Friday, edging lower since the start of the week. In recent trading, the pair extended losses to 104.25, nearing the 104.18 low last seen in late-July. Once below this level, the dollar will fall to the lowest level since the global sell-off seen in March and could threaten the 104.00 handle.
In commodities, crude oil prices bumped into resistance around $43.80 earlier during the European hours and retreated to the $43 area in recent trading as traders proceeded to profit-taking following strong gains seen over the last three days. The market received a strong boost from the OPEC’s Joint Ministerial Monitoring Committee meeting after Saudi Arabia chastised noncompliant members for trying to fool the market with overproduction. In the short-term, Brent needs to hold above the $42 figure in order to avoid a more aggressive selling pressure.
Nathan Lambert, Head of Global FX Analytical Department