FOREX
The US dollar is almost flat against other major currencies as the trading week commences in Europe. Following notable gains in the first half of the month, attributed to diminishing expectations of a quick unwinding of the Federal Reserve's monetary policy, the greenback has exhibited a relatively narrow trading range in recent sessions. Having discounted the most aggressive rate-cutting scenarios for now, investors are awaiting further developments that could shed light on the probable timing and extent of the Fed's future rate adjustments. While a majority still considers a first cut in March the baseline scenario, the subsequent trajectory remains uncertain, awaiting additional cues from the evolving economic landscape. Against this background, the release of the US retail sales numbers for December, which come out on Wednesday, will be closely watched.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
Stocks slid lower in Europe on Monday, extending the uncertain sentiment seen overnight in Asia as investors brace for another busy week on the macro front.
The STOXX-50 is trading lower following a third failure to clear the 4,500.0pts resistance level, currently on track to pull back towards the lower bound of its range at 4,420.0pts, led by financial and industrial shares.
What we have seen since the beginning of 2024 looks less and less like a take-profit move and more like a change of narrative for equity markets.
With lingering uncertainties regarding the outlook for monetary policies in both the US and the EU, reasons to buy the market are hard to find for investors.
Hopes of a quick dovish switch have been regularly undermined by both macro data and hawkish semantics from central bank officials.
All eyes will be on the World Economic Forum in Davos this week, in addition to another significant macro data release, including CPI figures from Germany and the UK, as traders will try to assess the monetary situation with all the macro hints they can get.
Today, volatility may arise from EU data such as the Industrial Production, 2023 figures from Germany, and a Eurozone finance ministers meeting in Brussels.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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