Following a downbeat tone in the US and Asia, European stocks edged lower on Tuesday. Earlier in the day, China kept its benchmark lending rate unchanged. In Europe, German producer prices for March climbed 0.9% on the month, a gain of 3.7% on the year. In the U.K., the jobless rate fell to 4.9% in the quarter through February, from 5.1%.
Meanwhile, European commissioner for internal market, Thierry Breton, said there will be enough vaccines for 70% of the bloc's population by July. As a reminder, most countries in the EU are struggling to even achieve at least 10% of full vaccinations as of today.
Against this backdrop, the FTSE 100 in London sheds 0.83% to 6,941, Italy’s FTSE MIB sheds 1.38% to 24,351, France’s CAC 40 is down by 0.98% to 6,234, while the German DAX 30 is down by 0.46% to 15,297. US stock index futures pared their earlier advance to keep more flat in early premarket trading.
In currencies, the dollar has steadied in Europe following the recent sell-off as risk sentiment deteriorated somehow. Still, the US currency remains broadly on the defensive, with downside risks persisting in the short term. EURUSD exceeded the 100-DMA, now targeting the 1.2100 next upside barrier. The pair climbed to fresh highs around 1.2080 earlier in the day before retreating slightly. Despite the current bullish tone, the common currency may need an extra catalyst to challenge the mentioned hurdle. In the immediate term, EURUSD needs to confirm the breakout on a daily closing basis and stay above the 100-DMA.
In commodities, Brent crude rallied to fresh one-month highs around $68 before correcting marginally lower amid some profit-taking. The market derives support from dollar weakness, a disruption to Libyan exports and expectations of a drop in U.S. crude inventories. Libya declared force majeure on exports from the port of Hariga and said it could extend the measure to other facilities. As the futures remain on the offensive, there is scope for further gains towards $70 in the coming days.
Nathan Lambert, Head of Global FX Analytical Department