Market Analysis

The dollar is showing weakness

FOREX

The dollar is showing weakness during early Wednesday trading, following a drop in US Treasury yields. The 10-year benchmark fell to 1.62%, well below the heights reached at the end of March, following yesterday’s publication of US consumer price data. Inflation has been at the forefront of investors’ concerns, worried that rising prices could force the Fed to start tapering its current accommodative policies earlier than previously expected, in a dynamic that had recently propelled the dollar to multi-month highs. However, it appears that the markets are starting to believe the Fed’s narrative that any rises in inflation will be short-lived and that the central bank’s current dovish stance will be maintained for the foreseeable future, creating scope for further dollar weakness.

Ricardo Evangelista – Senior Analyst, ActivTrades

 

EUROPEAN SHARES 
European shares mostly traded higher on Wednesday, despite an uneven performance across the continent with mixed earning reports in different areas. While most benchmarks remain close to their record highs, some technical indicators suggest that the price action is losing directionality. Indeed, investors seem to be keen to drive stock prices higher but will desperately need further market catalysts for that. That said, the very short-term risk appetite could seriously be dented if corporate results were to disappoint and if the pause in Asia’s vaccine roll-out lingers this week. In addition, even if inflation worries were eased by central bankers, they haven’t completely vanished. Investors are likely to pay attention to today’s Beige Book release from the Fed as well as speeches from both Jerome Powell and Christine Lagarde. Meanwhile, stock traders will assess the state of the banking sector today with earnings from Goldman Sachs, JP Morgan and Wells Fargo.

Pierre Veyret– Technical analyst, ActivTrades

 

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