FOREX
The US dollar weakened in relation to other major currencies during early Wednesday trading, cancelling out some of the previous session’s gains. Tuesday saw a return of fears over the health of the US regional banking sector, after First Republic Bank revealed that its customers had withdrawn $100 billion in March. Also on Tuesday, the publication of lower-than-expected US consumer confidence data stirred fears of an incoming economic contraction, further denting risk appetite and supporting the haven dollar. However, late on Tuesday, the release of stronger than expected results from Microsoft and Alphabet lifted the mood, allowing for the return of risk appetite on Wednesday, with the greenback giving up some of the gains of the previous session.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
The risk-off trading stance continued in Asia on Wednesday, fuelled by a batch of disappointing Australian CPI data, while both European and US contracts point to another bearish trading session.
European shares held declines, extending yesterday’s bearish sentiment, as concerns of a global economic slowdown and banking crisis resurged.
Trading optimism has been significantly dented, especially towards financial shares following the disappointing earnings of First Republic, and investors witnessed the first signs of the negative impacts the current uncertain economic environment has had towards corporate profits.
With that in mind, investors are likely to need further solid bullish catalysts, in the shape of improving macro data or significant dovish moves from central banks, before driving their cash back to riskier assets.
Meanwhile, we expect equity markets to continue the current bearish correction of their short-term bullish run started at the end of March.
Technically speaking, the STOXX-50 index has opened the way to a deeper correction following the break-out of the 4,365.0pts level. The Ichimoku indicators tends to support this case as the Chikou-Span confirmed the bearish breakout of its Kijun-line, while prices exit their bearish cloud.
Pierre Veyret– Technical analyst, ActivTrades
Source: ActivTrader
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