FOREX
The US dollar touched a two-month-low during early Tuesday trading. For the fourth consecutive session, the greenback is losing ground to other major currencies, having lost more than 1.3% since Friday’s release of disappointing employment data. The latest bout of weakness occurred after Fed officials admitted on Monday that the end of this tightening cycle is approaching. Investors, who had already priced a 25 basis points hike in July, interpreted the statement as hinting at a pause after this month’s rate increase. Against this background, the release of US inflation data on Wednesday could mark the end of this tightening cycle, should expectations of a slowdown in consumer prices be confirmed. On the other hand, if numbers surprise to the upside, there may be scope for another hike later in the year and for some dollar upside.
Ricardo Evangelista – Senior Analyst, ActivTrades
EUROPEAN SHARES
Shares climbed in Europe on Tuesday, following the trend in Asia overnight, while US futures also point to a higher open as investors bet on improving economic conditions.
Market sentiment is rising towards EU shares after investors welcomed the latest dovish surprise from ECB official Villeroy after he said the central bank was close to the end of its tightening campaign. Meanwhile, appetite for riskier assets has also been fueled by China's latest batch of dovish measures as it boosted hopes of higher demand from the region.
The Stoxx-50 trades over the 4,260.0pts mark, led higher by real estate and basic material stocks. However, the 4,285.0pts can be seen as a crucial resistance, well defended by bear traders so far, that could prevent the market from rebounding higher in the short term.
Pierre Veyret– Technical analyst, ActivTrades
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