Market Analysis

Dollar is surging following positive US job figures

FOREX

The US dollar is surging versus its peers during early Monday trading. The better-than-expected US job figures published on Friday eased some fears over the imminence of a US recession that could restrain the Federal Reserve’s rate hiking drive. Against this background, and with inflation figures – to be published this Wednesday – predicted to reach the highest level in four decades, another 75bp rate hike is expected when the Fed makes its next rate decision, creating scope for further dollar gains. Meanwhile, in Europe the situation is generating concerns, as the ongoing energy crisis looks set to escalate and increase the chances of a recession engulfing the continent. Such a scenario limits the options of the ECB in terms of hiking rates, leaving the outlook for the euro tilted to the downside, and making parity with the dollar a matter of when, rather than if.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

EUROPEAN SHARES 
Global markets slid lower everywhere at the start of the new week, as appetite for riskier assets decreased and lingering dark clouds continue to overshadow market sentiment. While monetary tightening, inflation and the prospect of slower growth have been dampening the markets of late, today’s risk aversion came from China. Investors chose to reduce their exposure to equities after Shanghai reported its first BA.5 Omicron sub-variant infection over the weekend, and sparked worries of renewed curbs and restrictions further impacting demand in many sectors in the region. Elsewhere, investors are braced for another busy week with many major macro developments on the agenda, starting with the highly awaited US Inflation print, the US PPI and jobless claims as well as the Federal Reserve Beige book and the Chinese GDP release. Meanwhile, corporate results (JPMorgan, Morgan Stanley, Citigroup and Wells Fargo) are likely to continue shaping market sentiment as many operators will be looking for further signs of an upcoming recession.

Pierre Veyret – Technical analyst, ActivTrades

Source: ActivTrader

 

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