Merkel wants the lockdown to be extended until February 15
Asian equities rose on Tuesday along with US stock index futures as investors awaited comments from Treasury Secretary nominee Janet Yellen due later today. It is widely expected that Yellen will affirm the country’s commitment to market-determined exchange rates and make clear the country doesn’t seek a weaker dollar for competitive advantage. As such, Hong Kong’s Hang Seng gained 2.7%, the Nikkei 225 in Tokyo gained 1.39%, South Korea’s Kospi jumped 2.7%, Australia’s S&P/ASX 200 rose 1.19% and the Shanghai Composite index bucked the trend, having lost nearly 1%.
In Europe, stocks opened higher ahead of the European ZEW data and the testimony from incoming US Treasury Secretary Janet Yellen. Meanwhile, ahead of her meeting with the State premiers, Germany’s Chancellor Angela Merkel said that she wants the lockdown to be extended until February 15, which is not much of a surprise, given the current virus situation in Germany. As a reminder, the current lockdown measures will stay in place until January 31st.
Meanwhile, as risk sentiment has improved somewhat, the dollar started to retreat marginally following recent gains. EURUSD bounced slightly from one-month lows registered around 1.2050 and climbed back above the 1.2100 figure in recent trading. The euro could extend the recovery if Yellen’s speech triggers a more significant selling pressure surrounding the greenback. In this scenario, the pair may exceed the 1.2150 region but the 20-DMA will likely continue to act as resistance in the days to come.
Elsewhere, oil prices bounced marginally on Tuesday, having regained the $55 figure. Brent crude regained the upside bias amid a better risk tone across the financial markets. Later today, the IEA report could affect short-term dynamics in the market. On the upside, the next resistance arrives at $56.