FOREX
The US dollar started the day with some gains in relation to other major currencies, halting yesterday’s sharp losses. On Tuesday, the greenback dropped half a percentage in relation to other major currencies following the release of unexpectedly weak labour data. The US JOLTS report on job openings for July dropped to the lowest level in over two years, triggering fears that the American economy may be about to slam hard on the brakes as the impact of the Federal Reserve’s draconian monetary tightening reaches a high watermark. Until last week, the markets were firmly betting on another Fed rate hike before the end of the year; however, the JOLTS numbers created uncertainty. Jerome Powell said last week that the central bank’s policymaking will ultimately be data-dependent, and yesterday's figures will make another rate hike less likely. Against this background, this Friday’s non-farm payrolls become even more relevant than they normally are, as the July new jobs data may become the tie-breaker in this tightly balanced decision-making process.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
European shares opened slightly lower on Wednesday, following a mixed trading session in Asia after the recent rally seems to be losing momentum, while US futures also point to a weaker open. Market sentiment turned uncertain after the latest batch of disappointing macro data showed inflation levels remained elevated in the EU while consumer confidence and job openings suggested slowing economic activity in the US.
The show isn’t over yet as investors await more CPI reports from the Eurozone, with data from Germany, Ireland and Belgium due later today, alongside the ADP Nonfarm employment change, GDP growth, and crude oil Inventories from the US to be published later in the afternoon.
As previously said, we expect market volatility to remain high due to the current busy agenda on the macro front. Investors are still struggling to assess where economies are heading, and significant changes in their portfolio allocation may take place in this second part of the week as key data looms.
Technically speaking, the STOXX-50 remains well-oriented as prices continue to trade above the 4,400.0pts mark. A drop in utility shares is offset by a growing appetite for financial, basic materials and energy stocks, preventing the European benchmark from dipping sharply.
Pierre Veyret– Technical analyst, ActivTrades
Source: ActivTrader
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