European stock markets edged north on Friday, heading for a weekly gain after a week of elevated uncertainty and concerns over rising coronavirus cases in some countries. Expectations of good news on the U.S.-China trade front added to some upbeat momentum on the last trading day of the week after China said it will increase buying of U.S. soybeans, corn, and ethanol in line with a phase one trade deal. Earlier this week, there were negotiations between Secretary of State Michael Pompeo and China’s top foreign policy official.
In Europe, market focus is now on the upcoming European Union summit where the officials will discuss a 750-billion-euro recovery fund aimed at reviving the struggling regional economy. EU leaders are said to be not budging during the conference call while France and Germany are said to be putting "heavyweight support" behind the European Commission's proposal. Merkel warned the EU leaders of "very, very difficult times" and cautioned interest on recovery fund.
Against this backdrop, the UK’s FTSE 100 adds 1.36% to 6,308. Italy’s FTSE MIB edges higher by 0.86 percent to 19,652, France’s CAC 40 gains 1.26 percent to 5,021, while German DAX 30 rises by 0.94 percent to 12,397. U.S. stock index futures are climbing higher, pointing to weekly gains as investors shrugged off the daily increase in new coronavirus infections in several states.
In currencies, EURUSD has been suffering losses for a fourth day in a row already. The pair is challenging the 1.12 figure again, a break below which will mark further deterioration in the short-term technical picture for the common currency. Now, as the prices remain under the selling pressure, mark focus is shifting to the 1.1160 support area. Meanwhile, the USD index continues its recovery from three-month lows but the momentum still looks too modest to bet on more decisive gains in the near term, especially as risk sentiment has improved today.
Brent crude climbed to nearly two-week highs marginally below $43 on Friday, as the oil market is supported by expectations of a recovery in energy demand coupled with lower supplies from the OPEC+ group. However, the futures are unlikely to make a decisive break above this barrier in the short term as traders remain cautious. Furthermore, profit-taking could send the prices lower before the end of the day and the trading week.
Nathan Lambert, Head of Global FX Analytical Department