After the Asian shares built on previous gains, European stock markets trade little changed on Thursday searching for a catalyst after two days of gains. Miners and energy firms lead globally as commodity and oil prices surge. Geopolitical tensions continue to dissipate this week, but this is already not enough for further strong ascent in global markets that are still focused on the corporate earnings. As such, Britain’s FTSE 100 trades just 0.05 per cent higher, at 7,321, France’s CAC 40 rises by 0.13 per cent to 5,387, while German’s DAX 30 sheds 0.20 per cent to 12,565. Wall Street stocks opened lower amid a decline in chipmakers after dismal forecast from Taiwan Semiconductor. The additional pressure comes from Apple’s shares which are down over 1 per cent due to fears of weak demand for iPhone 8 models.
Currency markets also suffer from lack of meaningful drivers. The greenback is on the back foot against the European currencies while attempting to extend its timid recovery against the yen. EURUSD remains in the limited range after another failed attempt to retest the 1.24 threshold. Despite some moderately hawkish comments from the Fed’s Brainard and stronger-than-expected Philadelphia Fed manufacturing survey for April, the dollar failed to send the euro lower as traders remain in a wait-and-see mode amid lack of catalysts. Besides, market participants still hesitate to long the buck, fearing fresh aggressive actions by Trump. As for the technical picture, the pair still has a chance to climb back above the 1.24 figure, but to make a decisive break of this area, the single currency needs additional impetus apart from dollar’s timidity.
GBPUSD meanwhile is recouping losses after a two-day decline from mid-2016 highs. The pair dipped to 1.460 early in Europe as another disappointing economic report was released. March UK retail sales fell 1.2% compared to increase by 0.8% in the previous month. However, ONS highlighted that a large decline in March was registered as a result of poor weather. In other words, it means the deterioration was seasonal but not fundamental. Therefore, the pound which met the 20-DMA around the above mentioned lows turned green and recovered to 1.4250. Despite the recent retreat, the British currency remains firmly in its bullish trend, and the dismal economic data this week will hardly make the Bank of England refrain from a rate hike in May. Therefore, the lower levels may be a buying opportunity for sterling bulls for now.
USDJPY keeps above 107.00 but the momentum looks weak and vulnerable as the greenback is still unattractive for longs because of the controversial and somehow inconsistent White house policy. Meanwhile, the yen lacks demand as a safe haven asset as global investors continue to buy high-yielders due to the abating uncertainty. For the pair to firmly return below the 107.00 mark, we need to see another wave of sell-off in global shares. And this scenario will come true if China-US trade tensions reemerge. The immediate resistance remains at 107.50.
Oil market is in the spotlight again. Brent crude jumped to fresh 3.5-year highs around $74.70 after a decisive break above the $74 threshold. Prices reacted vigorously to the report that Saudi Arabia would be happy to see crude at $80-$100 a barrel. It looks like this statement was viewed by traders as commitment of the top exporter to further cooperation within OPEC+ group in order to support the market in the longer term. It’s not surprising that Saudis want to see even higher prices, considering its economic reforms and Aramco IPO. The question is how the producer is going to achieve this amid increasing US shale production and the potential reluctance of some cartel members to curb more production. Tomorrow, market participants will focus in the meeting of OPEC and non-OPEC officials in Saudi Arabia, as the exporters will likely discuss prolongation of the agreement.
Gold priced turned mildly red in recent trading after a failed attempt to challenge yesterday’s tops in the $1,355 area. However, the dollar demand is too sluggish to send the yellow metal dramatically lower in the short term. Moreover, the global investors’ optimism is showing signs of dissipating. So, spot gold still has a chance for a recovery, unless the greenback stages a comeback during the New-York trading. The immediate meaningful resistance for the precious metal is around $1,348.