- European indices rose sharply on Monday, with DAX up 2.4% and the CAC40 adding 1.95% led by cyclicals, financials and materials stocks.
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ECB members see a growing risk that they will have to raise their key interest rate to 2% or more despite a likely recession, according to Reuters.
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Ukrainian forces retook some key areas in the Kharkiv region, which also supported upbeat moods.
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Broadly higher risk sentiment can be spotted across US markets ahead of tomorrow’s highly anticipated CPI report, which is expected to show a slowdown in inflation.
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Meanwhile, New York Fed 1 year inflation expectations fall to 5.75%, a 10-month low, from 6.2%, while 3-year inflation expectations fell to lowest in nearly 2 years at 2.8% vs 3.2% in July.
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Risk-on moods and weaker US dollar also support commodities prices. WTI oil rose over 1.0% and is trading, while Brent jumped nearly 2.0% and is testing $94.00 per barrel. NATGAS added over 4.0%.
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Gold rose over 1.0% and is trading around $1730 per ounce, while silver skyrocketed over 5.0% and is approaching psychological resistance at $20.00 per ounce.
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Agricultural commodities benefited from the upbeat market mood. Corn price rose over 2.0% while soybean surged 6.0% despite supply increases from Argentina and Ukraine. Also WASDE report point to lower production, exports and ending stocks.
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On the FX market could observe further dollar weakness as investors expect easing price pressures. Currently GBP and EUR are the best performing major currencies while JPY and USD lag the most.
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The sentiment in the cryptocurrency market is relatively mixed. Bitcoin is now gaining over 3.5% and broke above resistance at $ 22,000. Ethereum is doing much worse ahead of switching to the PoS protocol this week. The second largest cryptocurrency is currently losing 1.3%.
USDIDX - the dollar index continues to weaken, as ECB hawkish outlook weighed on the greenback. Broadly higher risk sentiment across markets comes ahead of the highly expected US CPI report on Tuesday, which is expected to show a slowdown in inflation. However, surprise to the upside could lead to resumption of the main trend as it would support further tightening from the Fed. Nevertheless as long as the current sentiment prevails, the index may be heading towards a major support zone around 106.65, which is marked with lower limit of the 1:1 structure, upward trendline and previous price reactions. Source: xStation5
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