FOREX
The US dollar is trading almost flat in relation to other major currencies during early European trading. The greenback lost gas after last week's rollercoaster, framed by the downside created by a dovish Fed meeting and disappointing labour numbers, followed by some hawkish remarks from senior Federal Reserve officials. Investors are now in waiting mode, with this Tuesday's release of US inflation data taking centre stage. With further public appearances from Fed officials lined up for later this week, tomorrow's inflation numbers will provide the backdrop to their stance, which will be crucial for the dollar's performance.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
Equities climbed slightly at the start of a new week in Europe despite a bullish trend losing direction ahead of this week’s CPI data.
Investors and analysts are bracing for crucial inflation prints from the US, EU and the UK this week, with the desperate need to clarify where monetary policies will likely go in these regions, especially after the mixed signals sent by Fed officials over the past ten days.
Lower-than-expected inflation rates would highlight the fact monetary tightening from the Fed, the ECB and the BoE has worked efficiently and that a dovish switch could be around the corner, supporting investors’ appetite for risk and driving stock markets to new highs.
Higher than anticipated inflation numbers would have the opposite effect, suggesting rates are not yet at a level restrictive enough and that more hikes may be coming, dramatically affecting the price action towards equities.
A number inside the previous vs anticipated data window could preserve the status quo and the current slow bullish stance on most markets, making investors wait for the next central bank meetings before driving stocks higher in a much sharper fashion.
The STOXX-50 trades around the 4,225.0pts mark, currently higher in all sectors, with healthcare and financial shares as the top movers. Despite a bullish trend slowdown registered by the bearish divergence with the RSI indicator, the market remains well-oriented, still trading its mid-term bullish channel.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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