Financial markets saw a choppy opening in Europe as traders welcome a very busy weekly agenda on Monday with some mixed sentiment. Now markets await the European finance ministers’ meeting in Brussels.
A mixed trading trade session in Asia was quiet dominated with currency movements as weaker yen gave a leeway for the Japanese stock benchmark to find a fresh five-and-a-half year high despite slightly lower-than-expected economic data from China.
In Europe, traders will be looking for the Eurogroup of euro-area finance ministers who will be meeting in the Belgian capital. They will likely storm the issues of financial aid and banking union, and clear the way for the latest doze of Greece’s bailout.
The bloc`s crisis-hit nations are back on the spot while policymakers strive to revive their ailing economy after they left weekend talks of the Group of Seven (G-7) signaling they are ready to scale back austerity, are open to ultra-loosened monetary policy.
Officials from the G-7 countries on Saturday renewed their vow to refrain from deliberately weakening currencies in the so-called "currency war" through monetary policies, after the U.S. exchange rate topped 100 yen for the first time in four years.
The euro was little changed against the dollar around $1.29 ahead of the Eurogroup’s meeting. Finance ministers of the euro-area will discuss Slovenia’s macroeconomic imbalances and how to implement an extension to loans to Ireland and Portugal.
Dutch Finance Minister and Eurogroup head Joreon Dijsselbloem and EU economic And Monetary Affairs Commissioner Olli Oren are expected to hold press conference after the meeting, which comes of the larger EcoFin meeting, also held in Brussels.
As of 03:39 EST, European shares traded lower this morning, with FTSE 100 down 18.17 points, or 0.27 percent, at 6,6606.81. The CAC 40 was down 7.06 points, or 0.18 percent, at 3,946.77, while DAX down 16.06 points, or 0.19 percent, at 8,262.53.
Market sentiment towards European bonds continue to see gradual improvement as policymakers affirmed last week they are poised to take action, and looking to unfreeze bank lending. Meanwhile, Italy, France and Germany prepare to hold bond auctions.
The Italian government bond auction will followed by the closely-watched U.S. retail sales report, expected to show that sales at U.S. retailers were still anemic for the second straight month in April, after showing the weakest performance since June 2012.
Many questions have been raised over the credibility of the U.S. Federal Reserve`s open-ended quantitative easing program, while some officials believe its time for the Fed to exit its stimulus strategy amid signs of stronger economic fundamentals.
However, the Fed`s still believe that the U.S. economy is not out of the woods yet amid ongoing uncertainty about the nation`s labor market, where job creation remains weak, and various sectors. The key retail sales apparently have not fully recovered yet.
The Fed is well missing its two target of an unemployment rate below 6.5 percent and an inflation outlook that is below 2.5 percent. Thus a quick scale-back on its aggressive monetary stimulus is so unlikely unless the world`s largest economy strengthens truly!
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