FOREX
The US dollar rose during early Tuesday trading following declarations by a senior Fed official, alluding to the lingering threat of inflation. The markets saw such remarks as a reminder that despite the majority view that the current hiking cycle has run its course, the underlying problem isn’t yet completely resolved. After last week’s dovish Fed meeting, followed by a disappointing jobs report, the greenback lost some traction in the markets, with analysts declaring the end of the Central Bank’s tightening drive. Yesterday’s remarks by the president of the Minneapolis Fed can be seen as a deliberate reminder to the financial markets, warning against excessive euphoria. Against this background, and with Jerome Powell scheduled to speak twice this week, the US dollar may continue to find short-term support.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
European shares rose following the opening bell on Tuesday, paring some of yesterday's losses as investors waited for more monetary clues.
Market sentiment towards stocks remains uncertain this week after some Fed officials came to temper recent dovish bets from investors following last week's developments.
The broad message is that the fight against inflation is still not over and that more monetary tightening isn't entirely off the table for now, which allows bull traders to take some profit out following the recent strong rally seen on a batch of assets such as stocks but also treasuries and FX counterpart against the US dollar.
However, we don't expect the current correction to expand much deeper as investors are likely to wait for further speeches from central bank officials this week before bringing significant adjustments to their risk exposure.
Of course, if the current view was to be picked up by other Fed or ECB officials, this could dramatically change market sentiment on most stock benchmarks in those regions.
With that in mind, today's focus will likely be drawn towards speeches from the ECB's McCaul and Enria and FOMC members Kashkari and Williams.
Meanwhile, the STOXX-50 trades above the 4,450.0pts level following a rebound over 4,440.0pts led by tech and real estate shares.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication.
All information has been prepared by ActivTrades (“AT”). The information does not contain a record of AT’s prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk.