FOREX
As the European trading session gets underway, the US dollar is trading relatively flat against a basket of other major currencies. Traders find themselves in a wait-and-see mode in anticipation of the Federal Reserve's rates announcement and subsequent press conference, both scheduled for later today. While the consensus amongst analysts leans towards unchanged interest rates, uncertainties persist regarding the hints that may surface in the policy statement and during the press conference.
The burning question remains: Will Jerome Powell maintain a hawkish stance, or will he disclose enough information to rekindle the optimism of those betting on a rate cut in March? Regardless of the outcome, the short- to medium-term dollar direction is likely to hinge on the revelations from today's events.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
Equities traded higher in Europe on Wednesday, despite US Futures contracts closing in the red yesterday, as focus switches from corporate results to macro data.
Today’s bullish behaviour in Europe clearly contrasts with the drop in risk appetite registered at the end of the US trading session yesterday, as investors were disappointed by the mixed feelings given by results from tech giants Microsoft and Alphabet.
While the earnings season will continue to roll, especially with tomorrow’s reports from Meta Platform, Apple and Amazon, today’s focus will be on monetary developments in Europe and the US, with the German CPI data and the key FOMC meeting due later today.
These developments are crucial for many, especially after January brought doubts regarding a dovish pivot in monetary policies from both regions.
German inflation is widely expected to come out 0.1% higher in January, so any figures below 0.2% could significantly boost dovish hopes and appetite for risk on the old continent, especially after French data showed a decreasing CPI earlier this morning.
In the US, all eyes will be on Jerome Powell’s press conference following the rate decision. While almost no one expects rate cuts or hikes, investors will cautiously assess the Fed Chairman’s speech to identify any hint of the FOMC’s stance for the March and April meetings.
With the January development seriously denting hopes of rate cuts soon, any dovish semantics from Jerome Powell could significantly impact market sentiment towards FX and equity markets.
The STOXX-50 is trading ever closer to its 4,682.0pts resistance, far above both moving averages and its bullish trendline.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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