Cautious trading stances prevail at the beginning of this new trading week
The US dollar is starting the week on the front foot, touching a ten-day maximum during early Monday trading. The American economy continues to show strength, which is good news for its citizens and businesses, and also for dollar bulls; US economic vitality means inflation is likely to remain high and therefore the Fed will in all probability stick to its hawkish policies. Looking ahead, the dollar is expected to remain supported amidst more market volatility, as inflation numbers, as well as the latest Fed minutes will be published later in the week.
Ricardo Evangelista – Senior Analyst, ActivTrades
European shares opened on a mixed tone on Monday, after a sell-off in Asian stocks was registered overnight, as investors brace for the start of the earnings season.
Cautious trading stances prevail at the beginning of this new trading week as traders continue to price in further hawkish moves from central bankers, especially following last week’s better-than-estimated job report in the US. With the prospect of further significant rate hikes to come, the extension of the US dollar rally is now seen as the most likely scenario and many are fearing it will negatively impact large exporting US companies during the next batch of corporate results beginning this week. The situation is different on the old continent as the single currency keeps trading lower and lower, which should support EU companies operating overseas. However, this is not what we’re seeing so far as EU stock traders keep assessing the uncertain geopolitical situation in Eastern Europe as well as pricing a large-scale energy crisis for the coming weeks/months. In London, the BoE has attempted to bring confidence back to the financial markets after doubling its asset purchases to £10 billion for this week.
Investors are bracing for another volatile week for stocks, as major macro development such as US/Chinese PPI and CPI data, the FOMC minutes and further speech from Central Banks official loom.
Pierre Veyret– Technical analyst, ActivTrades
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