FOREX
The US dollar hedged up during early European trading on Thursday, following the release of the latest Fed minutes, which were seen as hawkish. Notes from the FOMC December meeting revealed that, despite accepting that the pace of rate hikes should slow down, policymakers are still committed to controlling inflation. The general take away is that rates should remain elevated for longer than some have been anticipating. Against this background there may be scope for further dollar gains, especially if investors decide to start taking the Fed’s message to the letter. The markets are pricing in a pivot from the US central bank later this year, a scenario that clashes with the latest Federal Reserve minutes.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
Stocks registered a smooth decline in Europe on Thursday, as benchmarks pulled back towards newly established support levels following a three-day winning streak.
Healthcare and consumer cyclicals are among the top losers today, while the real estate sector and energy shares prevented indices from falling much deeper. The STOXX-50 index is trading 0.50% lower while the FTSE-100 index registered the best performance, as a decline in sterling lowered the pressure towards large exporting British companies.
While today’s slightly bearish price action has been sparked by the cautious wording regarding rates and inflation from the Fed in yesterday’s publication of the minutes of the last FOMC meeting, it can also be seen as a technical correction inside the broader bullish trend started since the beginning of the year. The underlying bullish sentiment is seen as still alive and as long as the momentum remains, a rebound over the new short-term floors established this week will stay as the most likely scenario.
However, market operators are also likely to become increasingly cautious for the end of the week, waiting for today’s major data, with the UK PMIs as well as the US ADP Non-Farm Employment change and initial jobless claims, while the NFP looms tomorrow.
Pierre Veyret– Technical analyst, ActivTrades
Source: ActivTrader
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