European stock markets continue to signal a correction but still holding around nine-month highs on Thursday, led by gains in German equities despite chancellor Angela Merkel kept restrictions in place until at least Christmas. Of note, market-research group GfK said today that the partial lockdown is expected to trigger a fall in German consumer sentiment next month. At that, weaker-than-expected data out of the United States did little to affect regional markets, with investor focus remaining on positive developments surrounding coronavirus vaccines. In the UK, Chancellor of the Exchequer Richie Sunak said the country’s economy was poised to contract by 11.3% this year.
Against this backdrop, the UK FTSE 100 index sheds 0.56% to 6,355, Italy’s FTSE MIB declines by 0.28 percent to 22,240, France’s CAC 40 is down by 0.18% to 5,561, while the German DAX 30 declines by just 0.03% to 13,284. The US Thanksgiving holiday keeps trading volumes fairly subdued.
In currencies, most pairs little changed and steady in a thin holiday trading on Thursday, with the greenback is gradually paring early losses as risk demand shows some signs of abating after the recent rally in high-yielding assets across the board. As such, EURUSD receded from two-month tops around 1.1940 and has settled marginally above the 1.1900 handle during the European hours as the bullish move has run out of steam and attracted some sellers. At this stage, the euro is supported by expectations of a stronger recovery in the Eurozone economy due to the potential vaccines. On the other hand, increasing chances of further ECB easing to be announced at the December meeting could cap further gains in the common currency.
Meanwhile, gold prices derived support from a weaker dollar and climbed marginally after a flat close on Wednesday. The current recovery in the precious metal is being capped by the $1,1820 area while on the downside, the key support still arrives at $1,797 where the important 200-DMA lies. it looks like the bullion will struggle to see a more sustained rebound in the short term as the selling pressure surrounding the greenback is easing. In a wider picture, gold remains depressed as long as it stays below the 100-DMA in the $1,910 area.
Oil prices faced resistance around $49 and shifted into a corrective mode on Thursday as traders prefer to take profit amid a lack of fresh positive developments in the market. As of writing, Brent crude was changing hands around the $48 level which could turn into resistance if the downside pressure intensifies any time soon. On the other hand, the bearish potential should stay limited as investors continue to expect the extension of output cuts by OPEC+ next week. If the prices regain the upside momentum, the $50 handle will come back into market focus.
Nathan Lambert, Head of Global FX Analytical Department