European stock markets opened lower on Wednesday amid the resurgent worries over rising coronavirus cases worldwide. On the other hand, investors refrain from a more decisive sell-off amid the lingering vaccine hopes. Also, European Central Bank President Christine Lagarde said that positive vaccine news would not fundamentally change the central bank’s plan to add stimulus. After a negative open, regional stocks turned mixed as markets struggle for direction amid conflicting signals.
On the data front, The UK consumer prices rose 0.7% on year in October, compared with a 0.5% rise in September and a rise by 0.5% expected by economists. Despite the CPI accelerated the recovery, the inflation rate remains well below the Bank of England's 2% target. Eurozone October final core CPI arrived at +0.2%, in line with the preliminary estimate.
Against this backdrop, the UK FTSE 100 index sheds 0.29% to 6,346, Italy’s FTSE MIB adds 1.00 percent to 21,649, France’s CAC 40 is flat at 5,483, while the German DAX 30 gains just 0.02% to 13,136. Meanwhile, US stock index futures try to pare earlier losses along with European stocks.
In currencies, the greenback keeps losing ground nearly across the board as traders keep a cautious tone on Wednesday. EURUSD has settled marginally below the 1.19 handle, extending gains for the fifth day in a row. If the pressure surrounding the dollar persists in the short term, the common currency could challenge this significant barrier that could trigger some profit-taking. Once above the hurdle, the 1.1920 area will come back into market focus. Later in the day, US construction sector data, as well as comments from the Fed officials, could affect short-term dynamics in USD pairs including EURUSD.
Meanwhile, oil prices resumed bullish attempts and regained the $44 figure after some hesitation earlier in the day. Traders still hope that the OPEC+ countries will postpone a rise in oil production from January 2021 despite the alliance failed to agree on its further actions during the recent meeting. Also, Brent is rising ahead of the EIA weekly report that could point to a brighter picture than the API data revealed yesterday. According to the API, US crude oil stockpiles increased by over 4 million barrels last week. On the positive side, oil prices derive some support from a weaker dollar and lingering vaccine hopes.
Nathan Lambert, Head of Global FX Analytical Department