European stocks opened lower on Friday but managed to erase losses afterward. Still, equities are on track to post their sharpest weekly decline since a selloff in March. By mid-session major indexes were hovering just above the flat line. On the positive side, the Eurozone GDP jumped by more than expected in the third quarter, with a quarterly climb of 12.7%. Inflation came in at -0.3% in October, unchanged from the previous month.
Meanwhile, the ECB continues to drop more hints of easing in December. Today, ECB's Mersch said that it is their firm intention to play their role in the second wave of the pandemic and the central bank will discuss the flexibility of instruments in December.
Against this backdrop, the UK FTSE 100 index sheds 0.13% to 5,574, Italy’s FTSE MIB gains 0.06 percent to 17,883, France’s CAC 40 edges higher by 0.55 percent to 4,594, while the German DAX 30 declines by 0.27% to 11,594. U.S. stock index futures decline amid fresh concerns about the outlook for technology giants after Apple Inc.’s iPhone sales and Twitter Inc.’s user growth both missed estimates. Markets are getting more volatile ahead of next week's American presidential election. Also, investor concerns have built that increases in Covid-19 cases in Europe and the U.S. will prompt restrictions that could curb economic growth. Of note, new U.S. coronavirus cases topped 89,000, setting a daily record.
In currencies, the greenback looks steady following the recent rally amid safe-haven demand. EURUSD dipped to the 1.1650 area where the 100-DMA lies before bounced slightly. Still, the pair failed to overcome the 1.17 handle despite strong economic data out of the Eurozone as traders keep a cautious tone ahead of the US election. As such, bets for a deeper pullback keep gathering pace, and it looks like the common currency could challenge the mentioned moving average to register fresh local lows. In other words, the continuation of the downtrend seems likely in the near-term. A break below recent lows around 1.1650 should pave the way for a deeper move down to September’s low near 1.1610.
Meanwhile, oil prices stay on the defensive after the recent plunge to June lows around $37.25. Икте crude has bounced somewhat but still struggles to overcome the $38 handle. the selling pressure has intensified as major economies in Europe renewed lockdowns to fight the second wave of the coronavirus, which could significantly weigh on economic recovery and fuel demand. If the futures fail to recover above $40 in the day to come, further losses could be expected. On the downside, the next target for bears arrives at $37.
Nathan Lambert, Head of Global FX Analytical Department