Market Analysis

The US dollar index is recording some gains

FOREX

The US dollar index is recording some gains during early Tuesday trading, following the publication of disappointing German industrial data. The greenback is once again fulfilling its role of safe haven, rising whenever market sentiment edges towards risk-off, while the euro retreats. After a fall of 17.5% in April, it was widely expected that German industrial production would recover sharply. However, the increase in activity was a mere 7.8%, curbing some of the enthusiasm towards the single currency that had dominated markets on Monday.

Ricardo Evangelista – Senior Analyst, ActivTrades


GOLD

Investor demand for bullion remains high, with the price getting close to last week’s peak, which was the highest level seen in the last 8 years. The price has been supported by the weakness of the greenback, with the Dollar Index falling below 97 in yesterday’s trading session. A clear break up above $1,790 could open space for further rallies, while any significant correction on stocks would be another supportive element for bullion.

From a fundamental point of view, we have to remember that gold’s strong bullish momentum is massively supported by investment demand, while jewellery and industrial demand is slowing. Moreover, central banks are still buying gold, albeit at a slower pace to the last few years.

Carlo Alberto De Casa – Chief analyst, ActivTrades

 

EUROPEAN SHARES 
European share markets slid slightly lower on Tuesday as bullish market sentiment takes a break ahead of a busy upcoming few days with a slew of new macro data. Investors unsurprisingly seized the occasion brought by this morning’s disappointing German industrial production data to cash in some of their profits, following a six-day winning streak on stocks. Many traders are now returning their focus to the upcoming data, with Wednesday’s EIA crude oil inventory report as well as the highly anticipated US weekly jobless claims release on Thursday, ahead of earnings season where volatility spikes are usually expected. The current consolidation isn’t really threatening the bullish trend and could be qualified as a “temporary break” before registering fresh highs.

 

The French CAC-40 Index is still trading well above 5,000pts following a sharp spike above 5,010pts in early trading. The technical configuration remains bullish as the price hasn’t challenged any low support levels following the validation of the bullish triangle chart pattern. This is likely to send the market above 5,100pts towards 5,135-5,255pts with 5,400pts the final target on a short-term basis.

Pierre Veyret– Technical analyst, ActivTrades

 

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