FOREX
The US dollar index, which measures the performance of the greenback versus a basket of other major currencies, hit a one-month maximum during early Wednesday trading. The sudden burst happened after Christopher Waller, the Federal Reserve Governor, said a careful approach to rate cutting is required. These words reinforced the market sentiment that, despite the surprisingly dovish Fed meeting in December, officials at the central bank remain firmly committed to controlling inflation, leading to a reassessment of expectations on the part of traders in what concerns the timing and extent of rate cuts. The probability of a first interest rate cut happening in March has been dropping since the beginning of the year, in a dynamic that accelerated after Waller's public address on Tuesday. Against this background, the surge of the dollar in relation to its peers is not surprising, and with the euro struggling due to the lack of clarity from the ECB concerning the unwinding of its monetary policy, there may be scope for further greenback gains.
Ricardo Evangelista – Senior Analyst, ActivTrades
EUROPEAN SHARES
Equities slid significantly lower in Europe on Wednesday as hawkish narrative from central banks and geopolitical uncertainties kept market sentiment under pressure.
The sell-off continues across a wide range of assets, including bonds and stocks, as investors moved to decrease their exposure as uncertainty rises and markets become less predictable.
ECB President Christine Lagarde echoed the hawkish stance previously brought by other Fed and ECB officials earlier this week, saying hopes of rapid rate cuts were a “distraction” and reaffirming there was no urgency in turning to a dovish approach.
Meanwhile, geopolitical uncertainty keeps rising in the Middle East as attacks from the Iran-backed Houthis are still disrupting freight traffic in the area, especially after a strike towards a Greek bulk carrier took place a few hours ago.
Risk appetite is falling, and the STOXX-50 is now registering another annual low, with all sectors in the red, following a break-out of its 4,420.0pts support level this morning.
The next support can be found well below the 4,400.0pts level at 4,365.0pts.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication.
All information has been prepared by ActivTrades (“AT”). The information does not contain a record of AT’s prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk.