European stock markets opened lower but erased early losses and turned marginally positive on Monday amid conflicting signals. Virus deaths surpassed 500,000 globally and global cases surged past 10 million while the incoming reports point to a gradual economic recovery. A Swiss nightclub and the U.K. city of Leicester reported clusters of outbreaks, though infection rates in Europe have slowed markedly compared with the U.S. Against this backdrop, the UK’s FTSE 100 adds 0.31% to 6,178. Italy’s FTSE MIB edges higher by 0.60 percent to 19,238, France’s CAC 40 adds just 0.02 percent to 4,909, while German DAX 30 rises by 0.37 percent to 12,133. U.S. stock index futures are wavering on Monday, suggesting a choppy week could be ahead.
In currencies, the euro surged to the 1.1280 in recent trading, threatening the 1.13 barrier as risk sentiment has improved somehow in the global financial markets and thus capped the safe-haven dollar demand. On the data front, Eurozone June final consumer confidence index arrived at -14.7, in line with the preliminary estimate. If the common currency manages to challenge the 1.13 barrier, the key resistance in the form of the 200-DMA around 1.1330 will come back into market focus.
USDJPY is marginally positive today, having settled just above the 107.00 handle. However, the dollar is yet to confirm a break above this level on a daily closing basis as risk sentiment remains unstable. On the upside, the key hurdle for bulls remains around the 20-DMA (107.55). as long as the prices stay below this level, downside risks continue to persist.
Meanwhile, Brent crude bounced from the $40 psychological level earlier in the day and climbed to the $41 handle in recent trading as risk sentiment turned positive. However, the recovery remains fragile as further rise in coronavirus cases may bring back demand for safe-haven assets and derail the current upside momentum in oil prices. Also, high oil inventories and the resumption of UD productions continue to act as bearish drivers for oil prices.
As for gold, the prices stay directionless on Monday but still clinging to long-term highs registered last week. The bullion is flirting with the $1,770 figure, with chances for a break above the $1,780 remain high. As the coronavirus-related concerns continue to unnerve investors, a broader demand for the safe-haven yellow metal will likely stay elevated for the time being despite the nearly overbought conditions. On the downside, the immediate support arrives around $1,756.
Nathan Lambert, Head of Global FX Analytical Department