Market Analysis

Equities continued to climb on Tuesday in Europe

FOREX

The US dollar index, which measures the performance of the American currency versus a basket of other major currencies, continues to retreat from the maximums reached last week, having shed more than 3% in relation to that peak. The global economy is facing considerable headwinds, including growing geopolitical instability in Europe, an energy crisis promising a tough northern hemisphere winter, and persistent inflation. Against this background, the Fed’s aggressive drive to tighten monetary policies is raising some eyebrows amongst investors, with many seeing the central bank’s hawkishness as an added burden for the US economy to carry at a time when it is already slowing down. However, as doubts grow in the markets over the ongoing tightening drive, investors have started to price in a less aggressive Federal Reserve, with the revised expectations reflected by greater demand for treasuries, lower yields, and the corresponding weakening of the greenback.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

EUROPEAN SHARES 
Equities continued to climb on Tuesday in Europe, extending yesterday’s gains and heading towards one of the best quarterly starts this year.

Market optimism seems to be back on track in October, mostly brought by the prospect of lower oil supply on the markets as well as hopes of a peak in hawkish monetary stances from central banks.

However, investor risk appetite remains driven by anticipation rather than solid evidence of improvement and bull traders may be overpricing rumours following the new 2022 market bottom registered last week. This could lead to a threatening situation, with a potential sharp sell-off on most stock indices if these anticipations were proven to be wrong by this week’s macro data.

That said, today’s focus is likely to be put toward the US job opportunities data for August, ECB President Lagarde’s speech as well as the decision on rates from the RBNZ.

The STOXX-50 index has broken-out of its mid-term bearish channel and cleared the 38.2% Fibonacci level around 3,410pts, and with the 34,60pts (50%) zone now in sight.

Pierre Veyret– Technical analyst, ActivTrades   

Source: ActivTrader

 

 

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