FOREX
The US dollar index, which tracks the greenback's performance against a basket of major currencies, edged lower in early Thursday trading as the rebound from the previous session lost momentum. Traders are now focused on the upcoming release of PCE data on Friday, the Federal Reserve's preferred inflation gauge, which will help to shape the central bank's rate-cutting plans. Following Jerome Powell's keynote at Jackson Hole, where the Fed Chairman set the stage for a potential rate cut announcement at the September meeting, dollar traders are keen to know the size of the cut and how many more might follow before the year's end. In this context, tomorrow's inflation report could significantly impact the markets. If a further deceleration in price increases is confirmed, the market may fully price in 75 basis points of cuts by year-end, a scenario likely to weaken the dollar further, potentially driving it to new yearly lows against its peers.
Ricardo Evangelista – Senior Analyst, ActivTrades
EUROPEAN SHARES
European shares edged higher on Thursday, with tech stocks leading the advance, paring earlier losses due to disappointing results published by Nvidia yesterday evening. Although the giant US chipmaker published positive revenue and sales growth data in its latest quarterly report yesterday, many investors were disappointed as the figures still fell below high expectations. This initially triggered a bearish reaction on the company’s share price and impacted market sentiment towards broader markets.
However, with the news now fully digested, it seems investors have realised that their expectations, driven by the latest batch of strong quarterly reports, may have been too optimistic. The $32.5 billion revenue published for the third quarter by Nvidia remains a very good overall performance, and investors initially hoping for more are now tempering their disappointment. With that in mind, we expect market volatility to decrease lower than seen over the last three weeks, as the rally in riskier assets should become more gradual from now on.
Indeed, investors will now switch their focus to macro data, where some uncertainty lingers. This should start today with a batch of CPI data from Eurozone countries, US GDP, and jobless claims data due later in the afternoon. The STOXX-50, led higher by consumer cyclicals and tech shares, is now challenging its immediate resistance around 4,930pts, where a confirmed break-out could drive prices higher towards the 5,000pts/5,050pts zone.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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