FOREX
After several consecutive sessions of gains that saw it climb more than 1.5% in relation to other major currencies, the US dollar is hedging down as Thursday's trading gets underway in Europe. The greenback's gains of the last few sessions came as investors lost some confidence in the likelihood of a first rate cut arriving in March, while also becoming more risk averse. Last night's release of December's Fed minutes helped to halt the growing pessimism, revealing how central bank officials saw the threat of inflation receding and are worried about the negative impact on the economy from maintaining interest rates elevated for a prolonged period. The next big event on the economic calendar is Friday's nonfarm payroll US jobs report release. A disappointing number could tilt expectations once again in the direction of a considerable unwinding of the Federal Reserve's restrictive monetary policy in 2024, a scenario that would likely bring back risk appetite, driving lower yields and a weaker dollar.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
Equities opened higher in Europe on Thursday, paring some of yesterday’s losses, as most benchmarks hit support levels.
The lateral consolidation for EU shares seems to be over after 2024 bearish market sentiment continued, driving the STOXX-50 to a break-out of its trading range yesterday.
This break-out can be attributed to several factors, including profit-taking following a strong end-of-year rally while awaiting further bullish market drivers, and fears of a wider conflict in the Middle East after recent attacks in Iran and Lebanon.
All eyes will remain on this week’s busy agenda for traders, with hopes that they will provide more confirmation about resilient economies and decreasing price pressure.
While everyone is already bracing for tomorrow’s US NFP report, today is also likely to bring its share of higher market volatility as UK PMI, German CPI and US ADP employment, Jobless Claims and PMI loom.
The STOXX-50 has reacted positively over the 4,430.0pts support so far, preventing the market from a bigger dip after yesterday’s sell-off. However, the situation has become threateningly bearish, and even if a pull-back towards 4,500.0pts remains possible, a break-out of 4,430.0pts could drive prices lower towards 4,375.0pts and 4,330.0pts by extension.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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