European equities shifted into recovery mode on Wednesday after the worst sell-off since the start of the year witnessed yesterday amid worries about a rapid rise in coronavirus cases in some countries. Furthermore, the World Health Organization warned a few days ago that global infection rate is approaching its highest level ever. In Japan, coronavirus panel said that at least three weeks of state of emergency is needed, as the situation across the country is facing another fresh wave of infections.
On the data front, the UK CPI came in at +0.7% in March when compared to +0.4% booked in February while missing expectations of a +0.8% print. The monthly figures showed that the UK consumer prices arrived at +0.3%, in line with expectations.
Against this backdrop, the FTSE 100 in London adds 0.31% to 6,880, Italy’s FTSE MIB gains 0.21% to 24,138, France’s CAC 40 is up by 0.44% to 6,191, while the German DAX 30 adds 0.22% to 15,162. US stock index futures wobble early in Wednesday amid rising virus cases.
The dollar regains some ground along with higher yields on Wednesday. As such, after hitting fresh highs around 1.2080 on Tuesday, EUR/USD failed to preserve gains and slipped back to the 1.2000 zone amid the prevailing risk-off tone that fueled some demand for the safe-haven greenback. The common currency could struggle further ahead of the upcoming ECB meeting due on Thursday.
Meanwhile, oil prices keep retreating from one-month highs around $68 as traders opted to take some profit amid rising coronavirus cases in India and Japan. India the world's third-largest oil user, reported another record increase in the daily death toll from COVID-19 and another record rise in cases. The futures slipped below the $66 figure in recent trading, staying under pressure during the European hours. Also on the negative side, the American Petroleum Institute late on Tuesday reported an unexpected build in crude oil inventories of 436,000 barrels for the week ending April 16 while analysts had predicted a draw of nearly 3 million barrels for the week. The U.S. Energy Information Administration will release its inventory data for last week later today.
Nathan Lambert, Head of Global FX Analytical Department