European Markets Open Higher, Euro Moves to the Upside
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- Markets across Europe gain as investors remain optimistic
- EUR/USD ticks higher, trades near 1.2050
European markets opened the Monday trading session with gains, continuing their move to higher grounds from last week. Major indexes, DAX, CAC40, and FTSE100 pointed higher by 0.30% to 0.70% as traders and investors punch the clock to start the week on a positive note. Moreover, global equities posted a new record high last week, boosted by hopes for US stimulus in the next few weeks, coupled with lower new daily Covid cases across the US.
The EUR/USD Outlook
The EUR/USD continues its climb in the early trading hours of the European session. On Friday, the pair took a turn from the bearish trend in recent weeks, following a rather disappointing US payrolls data. As it became clear, the US added 49,000 jobs in January, still leaving some 9 million people out of work compared to February last year. The unemployment rate dropped to 6.3% from 6.7% in the preceding month. The EUR/USD pair, at the time of the news release, ticked higher to close the day in positive territory, ending a four-day streak of losses. The EUR/USD is presently trading at 1.2030 with an intraday high of 1.2055.
It’s All Happening in the US
US equity futures also point to the upside as investors feel optimistic while they monitor the work being done in Washington. Treasury Secretary Janet Yellen is busy trying to convince lawmakers to embrace the $1.9tn rescue package. According to Ms. Yellen, the US needs the big stimulus to get the economy back on track quickly. President Joe Biden has pushed for the approval of his relief plan without GOP support while former President Donald Trump is set to undergo a Senate impeachment trial on Tuesday.
Mario Draghi for Prime Minister?
Elsewhere, former European Central Bank President Mario Draghi is being touted as the next Italian prime minister. Mr. Draghi is expected to start the second round of discussions on Monday as he pushes to form a new Italian government. If he receives enough support today, he will move towards selecting his cabinet ministers this week. Last week, Mario Draghi secured support from two key parties, the populist 5-Star Movement and the rightwing League. Following their meetings with Draghi, leaders of both parties, Vito Crimi and Matteo Salvini expressed their willingness to act in Italy’s interest and to put their differences aside for the good of the country. In a recent poll, more than half of Italians indicated they favor a Draghi government.
If elected as Prime Minister, Mario Draghi will be Italy’s leader until 2023. As soon as he takes office, he will face tough challenges that lay in the immediate future. He will need to find a way to pull the country out of the pandemic and boost the Italian economy which contracted more than 9% in 2020. Italy is set to receive €200bn in Covid relief aid from the European Union. For Italy to receive the full share of the rescue funds, President Mattarella and Mr. Draghi will have to work together to form a government as soon as possible and present a spending plan and outline economic reforms.
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