FOREX
The US dollar index, which gauges the performance of the greenback against other major currencies, edged up as trading commenced in Europe but remained near the multi-week low of 103.925 reached earlier in the session. US manufacturing PMI data, released late on Monday, confirmed the trend indicated by other economic reports, suggesting a slowdown in the American economy. Despite persistently high inflation that continues to concern Fed officials, this dynamic might be sufficient to justify a rate cut by the end of the summer. The recent dollar decline mirrors the growing probability of this outcome.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
European stocks slid lower on Tuesday as investors were disappointed after the latest batch of US data cast doubt over the health of the largest economy in the world. Almost all sectors opened in the red in Europe, with energy stocks as the worst performers so far after Eni, Total Energie and BP traded 2% lower due to oil oversupply concerns after OPEC countries confirmed the demand for black gold from top importers is slowing down.
Meanwhile, investors are struggling to digest the latest poor US PMI data and rising uncertainties about where the US economy is heading. At the same time, the start of the monetary easing cycle from the Fed remains unclear. Uncertainty has always been a significant factor in Risk-off sentiment, which is what we see here. Investors tend to limit their exposure to riskier assets when the short- to mid-term outlook becomes more challenging to anticipate, explaining the current pullback in equity markets.
The STOXX-50 index trades slightly below the 5,000.0pts level, inside a high volatility environment, ahead of another batch of key macro data from the US and the old continent this week.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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