After a retreat on Wall Street and mixed trading in Asia, European stock markets struggled on Wednesday amid the renewed concerns over a promising coronavirus vaccine after a report giving a sober view of phase-one results of the potential medicine. Elsewhere, economic data showed that U.K. consumer prices slowed to 0.8% last month from 1.5% in March, slightly weaker than the 0.9% increase expected. The final reading of the Eurozone CPI for April came in at +0.3% on a yearly basis, missing the flash estimate of +0.4% and +0.4% expectations.
Meanwhile, the European Commission Executive Vice President Valdis Dombrovskis said the EU member states must focus on investment in public health and protecting jobs and companies before worrying about fiscal sustainability. On the negative side, China vowed retaliation to the US as Washington seriously violates the One-China policy and noted that Taiwanese independence is a dead-end after Pompeo's message to Taiwan's Tsai.
Against this backdrop, UK’s FTSE 100 gains 0.15 percent to 6,011, Italy’s FTSE MIB edges lower by 0.11 percent to 17,016, France’s CAC 40 declines by 0.11 percent to 4,453, while German DAX 30 adds 0.45 percent to 11,123. U.S. stock index futures are pointing to solid gains on Wednesday ahead of the minutes of the Federal Reserve’s most recent policy meeting.
The dollar is trading in a mixed manner today. EURUSD barely reacted to the Eurozone CPI data and remains stuck between the 50- and 100-DMAs that come as the immediate support and resistance, respectively. The euro lacks the upside momentum to extend its recent ascent and exceed the 1.10 important barrier. On the other hand, downside risks look limited as well at this stage, suggesting the pair may continue its consolidation for some time. Later in the day, the minutes of the Federal Reserve’s policy meeting may affect the short-term dynamics in the pair.
In commodities, Brent crude resumed bullish attempts on Wednesday after a brief retreat witnessed yesterday. Despite the upside momentum turned more modest, signs of improving demand and a drawdown in U.S. crude inventories help the prices to stay afloat around $35. As data from the American Petroleum Institute showed on Tuesday, U.S. crude inventories fell by 4.8 million barrels to 521.3 million barrels in the week to May 15. Official data from the Energy Information Administration is due later today.
Nathan Lambert, Head of Global FX Analytical Department