FOREX
The US dollar rose during early Asian trading but has since given up most of the gains and is almost flat as the European session gets underway. The overnight release of Chinese data revealed a slowdown in services activity, bringing back concerns that the post-pandemic recovery in the world’s second-largest economy may be stalling, a scenario that is dollar-positive due to the greenback’s haven status. However, the subsequent flatness of the greenback in relation to other major currencies shows that the focus of foreign exchange traders shifted to the release of the last month’s Fed minutes. The minutes, due for release later today, will be looked at closely by investors keen to understand the mindset of officials at the US central bank, hoping to gauge the likelihood of a rate hike in July.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
European shares followed the Asian trend, sliding lower, as Chinese data dented risk appetite while investors also brace for further key macro data this week.
Disappointing Chinese PMI data has contributed to today’s bearish price shortly after the opening bell for European shares, as it raises some concerns about the strength of the region’s economic rebound.
With the prospect of higher demand from the second-biggest economy in the world fading, it is no surprise to see the appetite for equities taking a hit, especially towards tech and basic materials shares which are among the sharpest falls this morning.
However, the situation isn’t as threatening as it sounds. Many investors already anticipated such a pull-back after EU benchmarks recently hit major resistances. The STOXX-50 index is now challenging newly established support zones towards 4,365.0pts following a new all-time high registered earlier this week, in what could be considered a usual technical price action.
We expect the current support levels to limit the depth of the recent bearish correction. At the same time, investors are bracing for further macro developments that will come later today with the minutes of the last FOMC meeting, ahead of the key US employment report on Friday.
Pierre Veyret– Technical analyst, ActivTrades
Source: ActivTrader
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