European stocks are trading higher on Thursday, amid renewed hopes that the U.S. and China will be able to resolve their trade dispute. Positive consumer sentiment data out of Germany provided an additional boost, with Gfk consumer confidence rose for the first time in 2019 to come in at 9.9 for October following a reading of 9.7 in the previous month.
In other news, U.K. Prime Minister Boris challenged the opposition Labour Party to oust him in a vote of no confidence and trigger an early election. According to the latest news, the UK parliament voted against adjourning parliament until October 3 for Conservative conference. In general, political uncertainty remains in the markets amid an impeachment inquiry launched by House Democrats into the U.S. leader. The White House on Wednesday released a rough Trump.
Against this backdrop, UK’s FTSE 100 adds 1.32 per cent to 7386, Italy’s FTSE MIB gains 0.85 per cent to 21,974, France’s CAC 40 rises by 0.68 per cent to 5,621, while German DAX 30 gains 0.44 per cent to 12,288. US stocks index futures are slightly higher, boosted by trade-related hopes after Trump said that deal with China could happen sooner than people think.
In currencies, EURUSD dipped to fresh two-year lows at 1.0922, where the pair found support and jumped to the 1.0950 region. On the data front, in its third estimate, the United States Bureau of Economic Analysis reported that the real gross domestic product in the second quarter expanded by 2%, in line with market expectations and the previous estimate. At that, personal consumption expenditures and nonresidential fixed investment data was revised lower, which was offset by upward revisions to state and local government spending and exports.
After the release, the dollar eased from the session highs against major rivals, which helped the euro to turn positive on the day. Nevertheless, the pair remains under the selling pressure, with downside risks prevail as long as the euro remains below the 1.10 handle. Moreover, the risk of a break below the 1.09 figure is increasing as the US economy still looks more resilient than the Europe’s one, so the Federal Reserve could take a less dovish stance down the road.
In commodities, Brent crude remains on the defensive amid the reports that Saudi Arabia restores its oil output earlier than expected. The futures, which barely held above the $60 figure, struggle to cling to the $61 level, with the selling pressure could intensify as the modest optimism over the trade deal could wane soon. Only a firm break above the 100-DMA around $63 will partially improve the near-term technical picture for Brent.
Nathan Lambert, Head of Global FX Analytical Department