Market Analysis

The greenback loses ground following FOMC minutes

FOREX

The US dollar lost some ground to other major currencies during early European trading but remains close to the almost three-year highs reached during the previous session. The greenback was in demand, following the release of the latest Federal Reserve minutes, which showed that several members of the monetary policy committee are inclined to back several half-percent rate hikes in the upcoming meetings. This hawkish stance of the Fed, whose willingness to move more aggressively than some of its counterparts, such as the ECB and BoJ, is likely to maintain support for the dollar in the run-up to the summer.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

OIL

WTI crude oil prices recorded modest gains during early Thursday trading, remaining close to the three-week lows of the previous session. Prices dropped following easing supply-side concerns as the member countries of the International Energy Agency announced the intention to release into the market 60 million barrels of oil from their strategic reserves. Such move shows determination to face off supply-side risks posed by the continuing war in Ukraine and growing likelihood  that Russian oil will become increasingly scarce in Western markets. Also capping the scope for further gains in the price of the barrel are some signs of a drop in global demand, as the COVID situation in China continues to evolve and more lockdowns may translate into fewer orders from the world’s second largest economy.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

GOLD

Gold prices are almost flat during early Thursday trading, remaining within the same narrow range of the last few weeks. The value of the precious metal has been determined by the countering forces of, on one side, the geopolitical risk generated by the war in Ukraine, which enhances gold’s haven appeal, and the increasingly hawkish stance of the US Federal Reserve, which is capping gold gains due to the inverted correlation with the US dollar.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

EUROPEAN SHARES 
Stocks traded higher in Europe, despite another negative trading session in Asia while US Futures contracts also point to a bearish open. European stock investors seem to have “sold” the rumour and “bought” the news on Thursday, as share markets stabilized on the old continent following yesterday’s sharp sell-off ahead of the FOMC minutes release.

This morning’s bullish price actions come after some of the market uncertainty was lifted yesterday evening, after investors got more visibility brought by the clear roadmap from the Federal Reserve, about the new cycle of monetary tightening. Investors have welcomed the move from the Fed as it moved to reassure everyone by taking action to mitigate inflationary risks with the announcement of its balance sheet reduction, which should take years rather than months to take place (approx. $1trillion per year), limiting the negative impact of a quicker action towards growth and the economy as a whole. The best performances are being brought by the automotive and healthcare sectors, with a specific focus towards Swiss shares like Roche Holdings AG or Alcon Inc. The SMI-20 trades significantly higher, registering new tops, with prices getting closer and closer to their first major resistance at 12,385 pts.

Pierre Veyret– Technical analyst, ActivTrades

Source: ActivTrader

 

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