ActivTrades’ Market Analysts prepared their daily commentary on traditional markets for February 3, 2020. This is not a trading advice. See details below:
FOREX/BREXIT
The Pound lost more than 0.3% to the US dollar and is also down against the Euro, during early Monday trading, as the markets brace for a Boris Johnson speech, during which the British prime minister is expected to deliver his vision and guidelines for the post-brexit future of the country. According to reports, Johnson will highlight his government’s refusal to align with EU regulations and employment rights as part of any trade deal – both seen as red lines by the EU. This stance is likely to create friction in the negotiations for a post transition period trade deal. Such a scenario would be likely to have a very negative impact over the British economy and is behind Sterling’s weakness. Investors are once again pricing-in heightened chances of the UK crashing out of its existing relationship with the European Union at the end of the year, without a trade deal in place.
Ricardo Evangelista – Senior Analyst, ActivTrade
GOLD
As stock markets look to rebound after the strong sell-off seen at the end of last week, gold bullion is declining on this temporary slowing of the risk-off scenario. The strengthening of the greenback morning has further reduced support for the yellow metal.
Despite this, the correction so far is moderate and prices are still above the first support level of $1,570, ready for another rebound at the very first correction of stock markets. Technically, the first resistance level is now placed at $1,585, a return above this level could open the door for a rally above $1,600.
Carlo Alberto De Casa – Chief analyst, ActivTrades
EUROPEAN SHARES
European benchmarks opened higher on Monday despite a mixed trading session in Asia as Chinese markets re-opened. Today’s market sentiment remains fragile despite the cash injection from China into its financial system in order to sustain the economy and mitigate negative impacts of the Coronavirus.
Tech and Travel shares are among the best performers in Europe today, offsetting losses registered by Miners for the beginning of the week. Even if most EU benchmarks trade slightly higher today, markets still lack directionality and will need to clear significant upward price levels in order to pave the way for a solid recovery.
Elsewhere in Europe, the FTSE-100 index opened higher today as a mechanical effect of Sterling’s drop following indications from UK PM Johnson who said there was “no need” for the UK to accept various EU rules in trade deal. The market is now trading above 7,300 but will have to clear the 7,320 level in order to trigger the possibility of reaching 7,335 and 7,385 by extension. Investors may also want to pay attention to US manufacturing data for January due later today, where an increase is expected by economists.
FTSE-100 index chart
Pierre Veyret– Technical analyst, ActivTrades