GOLD
Gold prices rose in early Wednesday trading, benefiting from a softening of the dollar. The precious metal's gains are relatively modest, driven by hopes of a US rate cut following the Federal Reserve Chairman's acknowledgement that inflation is finally moving in the right direction. Such declarations raised hopes among traders that an interest rate cut would arrive soon after the summer. However, Jerome Powell also noted that more progress is required before the central bank starts loosening its monetary policy. In this context, today's release of the latest Fed minutes could provide more clues on the sentiment of decision-makers within the FOMC, with the publication of employment figures on Friday being another crucial moment for gold traders. The resilience of the US economy has created room for the Fed to maintain elevated rates, with the robust labour market playing an essential role in this dynamic. Therefore, Friday's NFP reading may impact traders' expectations, influencing treasury yields and the dollar's performance in relation to other major currencies, with gold prices likely reacting accordingly.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
European shares continued the rebound triggered yesterday over short-term technical support levels, extending gains registered at the end of the US trading session, as investors cheered on the latest dovish hints provided by Fed Chairman Jerome Powell. Market sentiment is rising on Wednesday, especially after Powell reassured investors that inflation was trending lower, getting closer to the Fed’s 2% target.
Although eyes remain on political developments in the UK and France this week, traders and analysts were pleased to see some positive evolution on the monetary front. All sectors are in the green, with the best performances registered by tech and energy stocks so far. The STOXX-50 index trades above 4,950pts, heading closer to the psychological 5,000pts level following its sharp bounce back over 4,875pts yesterday.
However, investors are not out of the woods yet, and market volatility should remain high for the rest of the week as key macro data loom. In addition to the European political agenda, trader focus will likely be towards today's UK PMI data, the US Jobless claims, Services PMI and Nonfarm Employment Change, ahead of this Friday’s NFP data.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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