Market Analysis

The US dollar continues on a downwards trend

FOREX

The US dollar continues on a downwards trend, with the index that measures its performance versus a basket of other major currencies down more than 0.3% during the early part of Tuesday’s session. After shedding almost 2.5% during the month of November, the Dollar Index looks set to remain on a slow but inexorable decline as investors price-in the prospect of the US central bank expanding its bond buying program. With a political stalemate in Washington blocking the release of fiscal stimulus the Fed will have little choice but to increase its easing policies, to somehow compensate for the absence of fiscal support for the US economy.

Ricardo Evangelista – Senior Analyst, ActivTrades


GOLD

Gold is trying to react after the selloff seen in the last few trading sessions. The new slowdown of the greenback is lifting bullion up, in a scenario still dominated by risk on, but where we can see a slowing down of the bullish pressure of last month. Some investors are thinking that markets are too optimistic about the chances of a recovery and perspectives for 2021, despite central banks’ stimulus. This could generate some profit taking on stocks and indices and be supportive for the gold price, although the short-term outlook remains weak for bullion after the break down of the key support level of $1,850.

Carlo Alberto De Casa – Chief analyst, ActivTrades

 

EUROPEAN SHARES 
European equities opened higher on Tuesday, following the trend started overnight in Asia after investors welcomed reassuring macro data from China and Australia. The resurgence of the bullish trading stance ended yesterday’s technical correction and put markets back on track to achieve fresh highs before the end of the year. Optimism continues in Europe with investors expecting more positive performances and betting on a brighter economic future with the end of the Covid-19 crisis potentially in sight. However, as already explained, macro data are likely to keep investors busy in the meantime, especially today with speeches from both Christine Lagarde and Jay Powell as well as the EU inflation report, one of the ECB’s key indicators, due later in the morning. The DAX-30 Index is boosted by automakers and miners and is now trading close to its 3-month high above the 13,400pts level. A clearing of the resistance at 13,450pts could drive the market further up, towards 13,555pts and even 13,820pts.

Pierre Veyret– Technical analyst, ActivTrades

 

The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication. All information has been prepared by ActivTrades PLC (“AT”). The information does not contain a record of AT’s prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk.