FOREX
The US dollar hedged down from Tuesday's highs but is still hovering near 11-month-maximums in relation to other major currencies. US economic data continues to surprise to the upside, with the latest release of labour figures, on Tuesday showing growth in the number of new job openings in the US during August. With economic numbers supporting the 'higher-for-longer' Fed narrative, the dollar continues to strengthen as the prospect of higher interest rates in the medium-to-long term drives a sell-off in treasuries, triggering higher yields and increasing the appeal of the greenback. Against this background, a strong reading on this Friday's Non-Farm Payrolls could consolidate the ongoing dynamic, leading to even more dollar gains.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
Equities extended their drop in Europe on Wednesday as the risk-off stance continues amid fears of more monetary tightening to come before year-end.
Rising bond yields in Europe and the US, fueled by the latest better-than-expected job report in the US that increased the likelihood of more monetary tightening from the Fed, highlights how cash keeps finding its way out of riskier assets.
The STOXX-50, now trading below the 4,100.0pts mark, is being weighed down by consumer cyclical, industrial, and financial shares, while utility stocks are the only ones in the green. The market has, however, just hit a major support zone over 4,060 pts where a bullish technical reaction may occur.
Volatility will likely remain high as investors await more macro developments today with the Eurozone PMIs and US ISM services index, alongside a speech from ECB President Christine Lagarde.
Pierre Veyret– Technical analyst, ActivTrades
Source: ActivTrader
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