FOREX
The US dollar is trading flat as Monday’s session gets started in Europe. With the Fed, ECB, and BoE all due to make monetary policy announcements this week, foreign currency markets are likely to remain largely flat until Wednesday. Amongst the three major central banks, the decision that is generating the greatest uncertainty is perhaps that of the Federal Reserve. Despite the insistence of senior central bank officials on a more hawkish tone, the markets are pricing-in a rate hike of 25 bp, which represents a slowing down comparatively to the previous five decisions. However, should the Fed surprise, ‘putting its money where its mouth is’, and hike rates by 50 bp, the dollar will be likely to regain the front foot and invert the trend of the last few weeks.
Ricardo Evangelista – Senior Analyst, ActivTrades
Рикардо Еванджелиста – старши анализатор, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
Stock indices fell shortly after the opening bell in Europe on Monday, extending losses registered overnight in Asia, as traders brace for a busy week on the macro front.
Real estate and tech shares registered the worst performances and drove most benchmarks lower, in potential profit-taking moves following last week’s rally and ahead of key macro data this week. Investors are awaiting another batch of major data from both Europe and the US this week (US consumer confidence, ISM, EU PMI, CPI, unemployment etc…) but all eyes are already on rates decision from the Federal Reserve, the ECB, and the BoE. Traders expect the Fed to slow the pace of hikes this year with a 25 bp increase projected this week, which tends to support risk appetite. On the other hand, the ECB is still estimated to proceed with a significant 50 bp rate hike on Thursday, a day after CPI data and the Fed’s decision. However, the overall sentiment remains strong towards riskier assets and investors aren’t expecting major pullbacks this week even as uncertainty rises slightly.
The STOXX-50 index slowly dances around its first available support level at 4,150.0pts, where a break-out could send prices lower to around 4,100.0pts while a rebound should drive the market higher toward 4,190.0pts and 4,250.0pts by extension.
Pierre Veyret– Technical analyst, ActivTrades
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