European stock markets opened mostly higher on Thursday as investors have been focused on the policy implications of the Democrats winning control of the U.S. Senate and the prospect for more stimulus spending to fuel economic growth. Elsewhere, in the latest minutes released Wednesday, the Federal Open Market Committee issued guidance it would continue purchases of bonds at least at its current pace until the economic recovery had made “substantial further progress.”
On the data front, according to Eurostat’s flash reading of Eurozone CPI report, the annual reading came in at -0.3% in December, missing expectations of -0.2% and -0.3% previous. The core figures came in at 0.2% in the reported month when compared to 0.2% expectations and 0.2% seen in November.
Against this backdrop, the FTSE 100 in London sheds 0.35% to 6,817, Italy’s FTSE MIB loses 0.02 percent to 22,729, France’s CAC 40 is up by 0.50% to 5,659, while the German DAX 30 adds 0.65% to 13,982. US stock index futures rose on Thursday as investors looked past the political unrest to focus instead on prospects for higher government spending.In currencies, the dollar switched into a recovery mode on Thursday after another sell-off seen earlier this week. The euro got rejected from the 1.2350 area but still was holding above the 1.2200 figure during the European session. If the corrective pressure intensifies any time soon, the common currency would threaten the 20-DMA, a break below which will trigger deterioration in the short-term technical picture. Apart from the recovering dollar, the overbought euro came under pressure amid weaker-than-expected Eurozone inflation data.
USDJPY, meanwhile, bounced from March lows around 102.60 and was flirting with the 20-DMA in recent trading. A recovery above this moving average on a daily closing basis would mark some improvements in the short-term technical picture. As the daily RSI is pointing north in the neutral territory, it looks like the greenback could regain the 104.00 figure in the near term. To do this, the pair needs to overcome the 103.90 resistance that capped gains in December.
Nathan Lambert, Head of Global FX Analytical Department