FOREX

The US dollar index is on track for a third consecutive session in the red as Friday’s trading gets underway in Europe. The greenback is down by more than 2.5 percent relative to the 20-year high reached on Wednesday, as currencies such as the euro and the pound bounced back after hawkish messages from the ECB and a decisive intervention by the BoE that helped to stabilize the bond market and also offered support to the pound. However, both currencies aren’t yet out of the woods. Volatility in foreign exchange markets remains high, with Europe facing an unprecedented energy crisis and growing geopolitical uncertainty on its eastern flank, with many expecting a tough winter for the economies of the eurozone and therefore for the single currency.
The situation in the UK isn’t that much better and, after the near collapse of several pension funds and the sharp fall of sterling earlier in the week, there may be scope for further currency instability as the country’s economic prospects continue to deteriorate.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

EUROPEAN SHARES 

EU shares pared some of yesterday’s losses this morning, edging higher as market sentiment improved slightly for the end of the week.

Investors drove most benchmarks higher on Friday, in a corrective bullish move following another annual low in session yesterday, as they cheered positive macro data from the UK, France and Germany. The overall trading mood remains strongly risk-off this week, as reasons to stay long become harder to find for asset managers, and stock indices keep trading inside their bearish channel despite today’s bullish price action.

European stock traders are cautiously bracing for today’s EU CPI data while the US Core PCE report looms later in the afternoon.

That said, the STOXX-50 index is registering lower highs and lows, currently trading close to the upper bound of its bearish channel. The RSI indicator doesn’t show any sign of a bullish break-out to come and new market bottoms remain as the most likely scenario for now.

Pierre Veyret– Technical analyst, ActivTrades       

Source: ActivTrader

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