FOREX
The US dollar is trading flat this morning as currency traders take a deep breath following the release of the latest Fed minutes on Wednesday and ahead of the publication of the US inflation numbers for September. Several FOMC members mentioned the recent rise in yields as a ‘natural’ mechanism that is creating tighter economic conditions, perhaps allowing the Fed to end its hiking cycle earlier. However, over the last week, bonds rallied, and the resulting lower yields may mean that, with inflation still well above the 2% target, another rate hike may be unavoidable. Against this background, today’s US inflation numbers release will be important. Traders will keep a close eye on the news, as a headline number above the expected 3.6% could reinforce the case for further Fed tightening and push the dollar back up to the 2023 maximums touched earlier in October.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
Stock indices kept climbing in Europe on Thursday, hitting new resistance, as investors welcomed positive developments from Asia and priced-in expected reassuring key US data due later today.
The risk-on trading stance remains alive after investors were pleased with the recent move from China's sovereign wealth fund, which announced a new share-buying programme for the biggest banks in the region.
While this news has sparked optimism and hopes of an economic boost in the country, market sentiment towards risky assets has also found further support from positive expectations about the next US CPI report, a key metric closely watched by the Fed.
The year-on-year and month-on-month CPI data are expected to show significant cooling in the pressure brought by rising prices to the US economy. This has fueled optimism toward the Fed's next monetary move, with hopes of a dovish pivot in sight.
There is a high chance today's focus will remain on the next US inflation report, helping traders assess the region's monetary outlook before corporate results and geopolitical tensions come back to the foreground of investors' minds.
The STOXX-50 index is still trading above the 4,200.0pts mark as the market challenges the 4,230.0pts resistance.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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