FOREX
The British pound continues to show strength in relation to the dollar and the euro, during early Tuesday trading. Sterling is carrying the positive momentum initiated on Monday, after the UK and the EU agreed on a framework to deal with unresolved issues related to the Northern Ireland protocol. The agreement, which has been named The Windsor Framework, comes after the EU made significant concessions and will allow both parties to embrace a more positive and fruitful relationship. After years of dispute, which ultimately could have led to a trade war between the two sides, investors were quick to price-in the brighter outlook for UK assets. The impact on the pound is clear, with sterling so far gaining 1.3% to the dollar and more than 0.5% to the euro.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
European shares dropped on Tuesday, following a patchy trading session overnight in Asia, as market sentiment continues to get pressured by hawkish monetary policies.
Most EU benchmarks fell shortly after the opening bell, led down by real estate and utility shares, after investors were disappointed by the latest CPI figures from France and Spain. Higher borrowing costs remain as the top market driver so far for investors, with increasing bets that hawkish policies may stay in place for longer than anticipated, especially after today’s inflation numbers. Both the EUR and USD currencies continue to trade higher while yields on both the US 10-year and the Euro bund are rising significantly, highlighting the decreased appetite for risk from investors.
However, while market volatility has been on the rise on most benchmarks recently, they still trade sideways inside their consolidation zones, underlying the lack of clear outlook on the mid- to long-term for traders. As long as major support levels are defended by buyers, no threatening price action should take place on stock markets.
The DAX-40 is one of EU’s top movers this morning with the market trading around 15,350.0pts following a sharp rebound over 15,285.0pts in the first exchanges.
Prices are now in the middle of their trading range, with investors patiently waiting for further catalyst that may be brought later in the afternoon with the Canadian GDP release as well as the US CB consumer confidence data.
Pierre Veyret– Technical analyst, ActivTrades
Source: ActivTrader
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