FOREX
The US dollar is stable against other major currencies in early Tuesday trading, staying close to the four-week high reached on Monday. The greenback's surge followed Friday's jump in Treasury yields, triggered by the unexpectedly strong US jobs report. The substantial number of new jobs created in May underscored the resilience of the American economy, creating headroom for the Federal Reserve to maintain rates at their current high levels for an extended period. With a US rate cut looking increasingly distant, traders are now focused on tomorrow's release of US inflation figures. A surprise in either direction could significantly impact the US dollar as traders quickly adjust their expectations for the Fed's monetary policy.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
Stocks edged mostly higher in Europe on Tuesday, with more volatility than usual as investors try to digest several political and economic developments. The STOXX-50 is trading higher, led by healthcare and basic material shares, in a rebound move following an earlier drop due to rising political uncertainties in the region following the results of the EU Parliament elections.
German Chancellor Olaf Scholz and French President Emmanuel Macron suffered crushing defeats after far-right movements managed to secure the most seats in the EU parliament last Sunday. President Macron took everyone by surprise yesterday, dissolving the French parliament and calling for new legislative elections at the end of the month following last Sunday’s results.
This adds significant political uncertainty in the region as investors now see a clear possibility of having far-right leader Marine Le Pen as the next Prime Minister in France. Elsewhere, investors are bracing for this week’s batch of significant data with CPI data from China, Germany, and the US, which is due tomorrow, alongside a decision on rates from the Fed.
With that in mind, we expect markets to remain volatile for the rest of the week, as investors are likely to proceed with significant risk allocation depending on the upcoming slew of macro data.
Pierre Veyret – Technical analyst, ActivTrades
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