FOREX
The US Dollar Index, which measures the greenback's performance against a basket of other major currencies, edged down in early Monday trading but remains close to the multi-week high touched at the end of the previous week. The continued support for the American currency can be attributed to a combination of inherent strength and the weakness of its main peers. The interest rate outlook in the US remains tilted towards a higher-for-longer scenario, as the American economy continues to outperform expectations and the reduction of inflation is slower than the Fed would desire. At the same time, political turbulence in France generates uncertainty and hurts the euro, while in Japan, the yen also struggles as the Bank of Japan hesitates to deploy restrictive monetary policy measures. Against this background, this Friday's release of US PCE inflation, seen as the Federal Reserve's favourite inflation gauge, could clarify the likely timing of the central bank's first rate cut and influence the dollar's performance accordingly.
Ricardo Evangelista – Senior Analyst, ActivTradesRicardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
European markets started the new week with moderate rises as investors braced for an intense week on both the monetary and political fronts.
Traders remain widely hesitant to drive riskier assets further up as uncertainty lingers on the old continent ahead of the first round of legislative elections in France. In addition, investor focus will drawn to the first UK Prime Ministerial and US Presidential debates, which are set to take place this week.
Finally, market operators are also waiting for more monetary developments this week, with many speeches from ECB officials and key inflation data from the US. Meanwhile, the outlook for monetary policies from New Zealand and Japan remains unclear. With that in mind, it is no surprise to see investors tempering their risk exposure, leading most benchmarks into consolidation phases.
The STOXX-50 index trades above 4,900pts following its rebound started last Friday, led slightly higher by consumer non-cyclicals and healthcare shares.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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