Germany’s March Ifo business climate index came in at 96.6 versus 93.2 expected
Following gains on Wall Street, Asian stocks surged from three-month lows on Friday while European markets opened higher, as investor sentiment improved globally following the recent sell-off in risky assets. Upbeat reports from major economies helped to overshadow worries about surging coronavirus cases in European countries and rising US-China tensions.
In particular, the Labour Department data showed on Thursday a declining number of Americans claimed unemployment insurance – claims for unemployment benefits dropped to a one-year low last week, adding to signs of a solid economic recovery in the US from the pandemic. Furthermore, Germany’s March Ifo business climate index came in at 96.6 versus 93.2 expected. Expectations index arrived at 100.4 versus 95.0 expected while current assessment came in at 93.0 versus 91.3 expected. Better-than-expected figures added to a more upbeat sentiment ahead of the weekend.
Also on the positive side, commodity prices came off local lows along with risky assets in general. Brent crude bounced following a 4% plunge witnessed yesterday. The recovery in oil prices is driven by concerns that a large container ship that ran aground in the Suez Canal may block the key shipping lane for weeks.
As a result, the euro managed to halt three consecutive daily pullbacks and proceeded to recovery from 2021 lows seen around 1.1760 on Thursday. However, the third wave of the coronavirus pandemic in the Eurozone and the reimposed lockdown restrictions will likely continue to cap gains in the EURUSD pair for the time being. Also, risk sentiment could deteriorate easily, thus putting the euro under pressure again.
Later today, inflation figures tracked by the PCE, personal income/spending, trade balance results, and the consumer sentiment index for the month of March will be in focus. Strong figures could add to a positive tone in stock markets ahead of the weekend.