FOREX
The US dollar hedged up in early Wednesday trading and continues to recover the ground lost to other major currencies at the end of last week. After last week’s dovish Fed stance and a disappointing jobs report, which saw the dollar touching a multi-week low, Federal Reserve officials have been working hard to reset expectations, talking tough and re-opening the door for further rate hikes. With inflation still far from the Fed’s 2% target, the last thing Jerome Powell and his peers want is a slump of the dollar and the complete unwinding of the tight financial conditions that allowed the Fed to pause earlier than many expected. Powell is scheduled to speak in public today, and, should he choose also to adopt a hawkish tone, the occasion may lead to further dollar gains.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
European indices continued their bearish breath on Wednesday as market sentiment lost direction while investors awaited further clues from central banks.
Monetary policies continue to drive risk appetite this week, and investors’ optimism remains under pressure after the RBA surprisingly proceeded with a rate hike after some Fed officials raised the lingering battle against inflation earlier this week.
The bearish correction continued on most European benchmarks, led by utilities and financial shares, as investors took some profit out and adopted a “wait and see” stance.
Traders and analysts are eagerly awaiting more macro data and hints about future monetary tightening from speeches by FED and ECB officials this week.
Some developments could occur during today’s trading session with the Eurogroup meeting alongside speeches from ECB officials, while Fed chairman Powell will provide more clues in the afternoon.
The STOXX-50 index still flirts with the 4,140.0pts zone, in a decreased volatility environment, while the rise in EU treasuries provides an interesting setup for stock markets.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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