FOREX

The US dollar index is on its third consecutive session in the green, hedging up as the European trading session gets underway. After dropping around 5% in November, its worst monthly performance in more than 10 years, the greenback is being sought by investors spooked by the prospect of a hard landing for the US economy in 2023. Economic data from the United States shows that the country’s economy is still running hot, in a dynamic that may see an inflation obsessed Federal Reserve continue with its aggressive stance for longer than had previously been expected. This week’s dollar gains can be explained by the pricing-in of the new scenario, as investors readjust their calculations, following a perhaps excessively optimistic November.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

EUROPEAN SHARES 
Shares opened on a mixed tone in Europe on Wednesday, following a bearish Asian trading session. while US futures also point to a weaker open as investors digest an uneven macro picture.

The uncertainty brought by the latest batch of EU sanctions placed towards Russia is significantly impacting market sentiment this week, especially towards energy shares as traders are fleeing oil markets. While investors struggle to assess the medium-term outlook in both the US and EU, the recent patchy batch of macro data is likely to hit risk appetite in the short-term as traders are tempted to take some profit out before the end of the year.

Technically speaking, the situation isn’t that threatening though. Even if the STOXX-50 has broken-out of its short-term bullish channel, the market seems to register a lateral consolidation phase between 3,925.0pts and the 4,000.0pts mark, waiting for a new catalyst to a more directional price action.

Market volatility is likely to rise this afternoon towards energy stocks as investors await the US Crude Oil Inventories data.

Pierre Veyret– Technical analyst, ActivTrades 

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