Daily market commentary: Investor expectations now set on a Fed pivot to a less hawkish stance


The US dollar is trading flat in relation to other major currencies, as the European session gets underway. The greenback posted some gains during the previous session, following the release of US consumer data which surprised to the upside and some hawkish remarks from senior Federal Reserve officials. However, it can be argued that the resilience in consumer spending seen during the month of October, is unlikely to last for much longer as the pandemic-era savings dry out, and families start to feel the deteriorating economic conditions. The upside for the greenback was limited, despite the positive economic data and efforts from Fed officials to keep the hawkish momentum going, with investor expectations now set on a Fed pivot to a less hawkish stance.

Ricardo Evangelista – Senior Analyst, ActivTrades

European Shares

European shares edged higher on Friday, despite Asian markets closing mixed as uncertainty rises at the end of the week.

Market sentiment towards riskier assets was put under pressure at the end of the US trading session on Thursday after traders witnessed FOMC officials playing down hopes of a pause or pivot from the Fed’s monetary tightening cycle. Additionally, rising covid cases and bond market instability in China have also added to the current uncertain climate, sending the MSCI Asia Pacific index 1.05% lower.

However, the mood seems to be different on the old continent today as traders keep pushing stock prices higher while assessing the latest speech from ECB President Christine Lagarde on interest rate inflation.

Market volatility is likely to remain high today as the announcement of an increasingly restrictive ECB, and its will to do whatever it takes to tame rising price pressure (including negatively impact growth), could put stock markets at risk.

The STOXX-50 index keeps trading right below its first resistance level at 3,920.0pts where a clear break-out could lead prices towards 3,965.0pts and above 4,000.0pts by extension.

On the other hand, a failure to clear this level could potentially send the market to a correction phase, towards 3,860.0pts and 3,830.0pts.

Pierre Veyret– Technical analyst, ActivTrades

Disclaimer: opinions are personal to the authors and do not reflect the opinions of LeapRate. This is not a trading advice.


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