Following gains in Asia, European stocks rose on Thursday in thin pre-holiday trading, as investors expect a Brexit deal to be announced in hours. British Prime Minister Boris Johnson held a late-night conference call with his Cabinet of senior ministers. As a reminder, fishing has been a major sticking point in talks. The easing of restrictions between the UK and France added to the upbeat tone in the regional markets as well after Britain had a more contagious variant of COVID on Monday.
Against this backdrop, the UK FTSE 100 index adds 0.16% to 6,440, Italy’s FTSE MIB gains 1.31 percent to 22,130, France’s CAC 40 is up by 0.09% to 5,532, while the German DAX 30 rises by 1.26% to 13,587. US stock index futures were marginally higher ahead of the final trading day of the holiday-shortened week.
In currencies, the dollar is on the back foot as the risk-on tone dominates the markets globally. EURUSD retains a bullish tone but struggles around the 1.2200 handles following a rejection from 1.2220. It looks like the pair will struggle for direction in the immediate term while Brexit talks outcome will set the further tone for the euro as well as for the sterling. GBPUSD was flirting with the 1.3600 level at the time of writing as the market focus remains on the ongoing trade talks.
Elsewhere, oil prices failed to challenge the $51.80 local resistance earlier in the day and erased intraday gains as a result. Brent crude stays elevated while holding above the ascending 20-DMA after the recent corrective attempts. Positive risk sentiment helps the futures to stay afloat despite the lack of industry drivers except for yesterday’s report from the EIA that pointed to a decline in US crude oil inventories by less than 600,000 barrels. In the short term, the $51 handle will stay in market focus as a break below it could take the prices back to the mentioned moving average.
Meanwhile, gold prices extend yesterday’s recovery amid a weaker dollar. The precious metal has climbed to the $1,880 area, a break above which could push the prices to the $1,900 key barrier. However, the bullish potential in the gold market still looks limited amid the prevailing risk-on tone in the global financial markets. On the downside, the immediate support is represented by the $1,870 handle. In the wider picture, gold remains within a bearish trend as long as the prices stay below $1,930.
Nathan Lambert, Head of Global FX Analytical Department