FOREX
The US dollar has shown minimal movement in early Friday trading, following its dip in the previous session. This decline came after the release of GDP data, revealing a slower-than-expected growth rate for the American economy in the first quarter. In this context, today's unveiling of personal core expenditure, the Fed's preferred inflation gauge, carries significant importance. While Q1 growth fell short of predictions, inflation remains stubbornly high, and a robust PCE reading would feed into the Fed's reluctance to cut interest rates. Such a scenario, if confirmed, could bolster treasury yields and prompt the dollar to revisit the multi-month highs achieved in the previous week.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
European equities climbed, alongside Asian shares and US Futures for the last trading session of the week, as investors digested the latest batch of earnings reports ahead of the highly awaited US PCE data. Volatility remains high on most benchmarks as we get closer to the end of a busy week for investors. Reassuring corporate results from Alphabet and Microsoft have lifted market sentiment, leading to a sharp rebound in the tech sector.
The overall economic picture remains challenging for most investors following the latest batch of confusing US economic data after GDP figures displayed a slowing economy. While the “bad news is good news” narrative should remain in place, most investors will cautiously monitor today’s US PCE data, the Fed’s favourite gauge, to find more clues on where inflation is heading. A reading stronger than estimated would significantly support the US dollar and the “higher for longer” scenario regarding borrowing rates.
On the other hand, a PCE Price Index lower than expected would support market sentiment toward equity markets. In any case, we expect this last trading session of the week to remain volatile on most markets. The STOXX-50 index now trades back below the 5,000 pts level despite today’s rebound over 4,900 pts, led by tech shares.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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