FOREX
The US dollar index touched a multi-month low during early Friday trading as traders priced in the impact of lower-than-expected American GDP figures released late Thursday. The disappointing data meant an increase in the probability of a Fed rate cut arriving as early as March, hurting the appeal of the US dollar. Against this background, the release of PCE price index data later today will be the focus for investors. Another disappointing number would accelerate the bond market rally, with yields dropping and the dollar weakening further in relation to other currencies. In such a scenario, and without further significant economic calendar events until the new year, dollar risk will likely remain tilted to the downside until the release of the Fed minutes in early January.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
EU shares slid lower on Friday following a negative trading session in Asia, while liquidity became thinner and thinner ahead of US data and the Christmas holidays.
China negatively impacted market sentiment overnight after announcing curbing measures towards its huge online gaming industry, immediately sending related equities lower. In addition, traders were also disappointed to hear further negative news in other sectors, such as retailers, with Nike reporting a weaker sales outlook than anticipated.
The famous Christmas rally hasn’t occurred this year, with investors still digesting the last monetary comments from central bank officials and taking out some profit after the strong bullish trend started at the end of October. Traders are, however, bracing for the last batch of significant US data before the Christmas holidays, with all eyes on the crucial PCE Core report expected to provide investors with more clues on monetary policy outlook.
We expect market volatility to increase significantly this afternoon, especially as major data loom and liquidity gets thinner ahead of the Christmas holidays, which should lead to sharp price action over a wide range of assets.
The STOXX-50 index trades above 4,500.0pts, continuing its consolidation following the invalidation of its mid-term bullish trend. The next support level can be located towards 4,430.0pts.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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