Following downbeat sentiment elsewhere, European stocks fell on Wednesday, as investors remain concerned about rising inflation, with the Federal Open Market Committee publishing the minutes from its April meeting later today. The document could provide more clues on when the central bank could consider tapering bond purchases, which is making market players nervous ahead of the event.
On the data front, consumer prices in the U.K. rose 1.5% on the year in April, twice the rate of inflation reported in the previous month. In the Eurozone, the consumer prices came in at 1.6% on a yearly basis, meeting the flash estimate of 1.6%. The core figure dropped to 0,7%, missing the 0.8% forecasts. On a monthly basis, the CPI figure arrived at 0.6% versus 0.6% expectations and 0.9% previous.
Elsewhere, a business survey conducted by the German DIHK Chambers of Industry and Commerce showed that the country’s economy is likely to see a 3% growth this year amid improved business sentiment over the past three months. The DIHK's updated growth forecast compares with its previous estimate of 2.8% projected in February. Meanwhile, the European Central Bank Vice President Luis de Guindos said he is comfortable with the present levels of yields while momentum of vaccination campaign key in recovery.
Against this backdrop, the UK FTSE 100 sheds 1.05% to 6,960, Italy’s FTSE MIB loses 0.94% to 24,647, France’s CAC 40 is down by 0.95% to 6,293, while the German DAX 30 declines by 1.32% to 15,183. US stock index futures point to a lower start to the session ahead of the opening bell.
In currencies, the USD index remains on the defensive below the 90.00 figure. However, the selling pressure has eased somehow today, as the US 10-year Treasury yields climbed to the 1.65% region ahead of the publication of the FOMC minutes. As such, EURUSD slipped from early-January highs seen around 1.2245 earlier in the day. The pair has settled around 1.2200 in recent trading, down 0.14% on the day. If the dollar proceeds to a more robust recovery, the common currency could slip towards the 1.2180 region in the short term.
Elsewhere, gold prices extended the rally to late-January highs around $1,875, registering the fourth consecutive bullish day in a row on Tuesday. However, the precious metal failed to preserve gains and retreated marginally today. The bullion slipped from the mentioned highs to the $1,860 area in recent trading. It looks like the XAUUSD could see a deeper downside correction in the short term if the dollar extends the current recovery from fresh multi-week lows seen earlier this week.
Nathan Lambert, Head of Global FX Analytical Department