FOREX
The US dollar rose versus other major currencies during early Tuesday trading, touching a 2023 maximum, as demand for the greenback surged after the release of better-than-expected US manufacturing data. With economic activity remaining strong, expectations amongst investors continue to tilt towards a scenario of higher-for-longer interest rates. The last few weeks saw the release of several strong economic figures in the US, painting a picture of resilience that reinforces the likelihood of the Federal Reserve maintaining interest rates at the current levels for a prolonged period. Against a background of healthy economic growth and dissipating uncertainty, after the last-minute deal that avoided a government shutdown, the planets seem aligned for the continuation of the current dollar strength.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
Markets slid lower in Europe on Tuesday, extending the bearish sentiment seen in Asia overnight, as optimism fades towards riskier assets.
The wind of relief brought by last weekend’s positive developments around US Federal funding is slowly evaporating, taken away by monetary fears after Jerome Powell hinted at more tightening before year-end in a speech yesterday.
With inflation worries and the prospect of further rate hikes back under the spotlight, market sentiment remains under pressure. Investors tend to limit their exposure to stocks as uncertainty rises. More volatility is likely later in the afternoon with the key US JOLTS report for August, alongside the Atlanta Fed president Raphael Bostic’s speech on the economic outlook and rising price pressure.
The STOXX-50 index, led lower by almost all sectors with real estate and utility shares as the worst performers, has now pulled back towards last week’s support level over 4,110.0pts. The market, still trading under its bearish trendline, shows no sign of a bullish reversal to come, technically speaking.
A break-out of the 4,100 pts / 4,110 pts zone could quickly lead the market deeper, around 4,065 pts and even 4,015 pts by extension.
Pierre Veyret– Technical analyst, ActivTrades
Source: ActivTrader
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