FOREX
The US dollar is trading softer after closing the previous session with more than a quarter per cent gain against a basket of other major currencies. This strengthening of the greenback comes as expectations fade of a speedy unwinding of the Fed’s monetary tightening. In the run-up to the end of 2023, after a surprisingly dovish Jerome Powell all but announced the end of the fight against inflation, the dollar weakened as investors priced in a first rate cut in March, with several more expected throughout 2024. However, the resilience of the US economy and the defiant tone of some Federal Reserve officials, who refused to claim victory in the fight against inflation, meant that the optimism of mid-to-late December evolved into uncertainty in a dynamic that is dollar positive. Against this background, tomorrow’s US CPI numbers will be crucial in determining the short- to medium-term dollar price action. These inflation figures can either consolidate the view that it is too early to announce the end of monetary tightening or, should they read below expectations, revive risk appetite and cancel the dollar gains of the last two weeks.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
European shares fluctuated on Wednesday after a volatile trading session overnight, as bearish sentiment remains ahead of key macro data.
The STOXX-50 index still trades between 4,420.0pts and 4,500.0pts and is currently challenging its 4,470.0pts resistance level amid bearish sentiment across all sectors, with healthcare and utility shares the worst performers so far.
The "wait and see" trading stance remains prevalent across most stock indices as investors await more clarity on monetary policies. This clarity could come tomorrow with the release of the highly anticipated US CPI report for December.
Meanwhile, even if though bearish sentiment persists everywhere, we don't expect any directional price action, and a scenario of a 4,420.0pts break-out by the STOXX-50 index isn't the most likely today. However, volatility spikes could still occur and bring momentary turbulences to market sentiment in the short term.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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