European stocks opened with a positive mode on Thursday before paring some gains during the session as investors are turning more cautious ahead of the ECB meeting. Earlier, the upbeat tone was triggered by the inauguration of U.S. President Joe Biden that sent Wall Street indexes to fresh all-time highs. Given that the ECB eased its policy substantially last month, the central bank is expected to keep interest rates and the pace of bond purchases unchanged later today. On the other hand, Lagarde could strike a dovish tone in her statement amid the ongoing pandemic and preparations for a prolonged period of Covid-19 restrictions throughout the continent.
Elsewhere, Sports betting company Entain reported a 41% gain in online gaming revenue in the fourth quarter. Still, the firm’s stocks fell nearly 1.5% during the session. As a reminder, MGM Resorts recently dropped its offer to buy the company after Entain's management dismissed it as too low. Meanwhile, Swiss e-commerce pharmacy Zur Rose Group gained 4% after strong full-year results.
Against this backdrop, the FTSE 100 in London gains 0.12% to 6,748, Italy’s FTSE MIB adds 0.06 percent to 22,664, France’s CAC 40 is down by 0.05% to 5,625, while the German DAX 30 rises by 0.37% to 13,972. US stock index futures are edging higher, signaling their readiness to extend the rally following another record-breaking session, with earnings season continuing today with Baker Hughes, Union Pacific and Citrix. On the economic front, Labor Department will release last week’s jobless claims data.
In currencies, the safe-haven dollar is under pressure across the board as traders express optimism after the inauguration of Joe Biden. EURUSD regained the upside bias, nearing the 1.2150 local resistance ahead of the ECB meeting that could send the pair lower if the central bank strikes a downbeat tone on the economy, pandemic, and its monetary policy. If so, the common currency could threaten the 1.2050 area that acts as support since early-December. This level should cap potential losses and trigger a bounce eventually.
In commodities, Brent crude erased earlier gains and turned flat during the European hours as the $56 handle acted as resistance. The API report showed that US crude oil inventories rose by 2.6 million barrels last week, thus capping gains in the market yesterday. Now, the futures refrain from more decisive price action ahead of the official data from the EIA. If the report disappoints, the prices could suffer losses in the short term.
Nathan Lambert, Head of Global FX Analytical Department