ActivTrades’ Market Analysts prepared their daily commentary on traditional markets for February 4, 2020. This is not a trading advice. See details below:
FOREX
The pound is continuing the trend from yesterday, a day in which the British currency lost more than 1.4% to the US dollar and 1.2% to the euro, with further losses accumulating for Sterling early in Tuesday’s session. The markets continue to price in the potential impact on the British economy of there being no trade deal in place with the EU at the end of the current transition period. It was always going to be a tall order to get a trade deal in place in less than 11 months, however the two sides appear to have opposing views over the foundations for the future of the relationship, dampening optimism and leaving the pound exposed to downside risk due.
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD
The gold price has fallen on the return of an appetite for risk-on assets, combined with the recovery of the US dollar. The rebound of Asian stock markets is giving some optimism to markets, moving liquidity away from gold. The price crashed through the support level placed at $1,572 and is now approaching the level of $1,565, where prices are expected to find a stronger support.
Carlo Alberto De Casa – Chief analyst, ActivTrades
OIL
The recovery of stock markets is lifting up the oil price as investors are – at least for now – less scared by the coronavirus. The barrel is still playing on the key support level of $51, after having tested the psychological level of $50. Despite this, the short-term trend remains bearish and there will only be an inversion if the price can return above the area of $53.50-$54.
Carlo Alberto De Casa – Chief analyst, ActivTrades
EUROPEAN SHARES
European shares edged higher alongside US futures on Tuesday following a solid recovery overnight by Asian markets. Today’s market sentiment is being boosted as investors seem to welcome the set of measures by the Chinese government to sustain economic growth, as the negative impact of the coronavirus remains hard to gauge. Investors’ risk-on trading mood has also been triggered by the last words from the Office of the US Trade Representative who said President Trump could provide China with some flexibility regarding the Phase One trade deal if the numbers are going in the right direction, which would reduce the virus’ impact on the relationship between the world’s two largest economies. All benchmarks are trading higher in Europe with the DAX-30 as well as the ices the best performers so far.
London’s main index continues to benefit from Sterling’s decline and is now trading close to its first major resistance, located at 7,440pts below its 55-period exponential moving average, following its break-out of the short-term bearish channel. New targets could be found near 7,460pts and 7,515pts if prices manage to clear 7,440pts.
FTSE-100 index chart
Pierre Veyret– Technical analyst, ActivTrades