ActivTrades’ Market Analysts have prepared for LeapRate their daily commentary on traditional markets for January 9, 2020. This is not a trading advice. See details below:
FOREX
Safe haven currencies continue to lose traction as risk appetite grows, fed by the fizzling out of the latest Iran v US crisis episode. It looks like both sides decided to bury the hatchet of war, following the assassination of a prominent Iranian general and the retaliatory missile attack on American bases in Iraq.
Iran’s reaction appears to have been conducted so as not to lose face, while at the same time causing minimal damage, in order to avoid an American response. This outcome lifted the mood of investors and since the missile attack the dollar has gained roughly 0.85% against the Japanese yen, and 0.40% to the Swiss franc, signalling a clear return to a risk-on environment. This is also illustrated by the behaviour of the S&P 500, whose futures hit a new high during early Thursday trading.
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD
Investors are seeing relatively less risk from the US–Iran situation, at least for now. This had a strong impact on gold, which collapsed to $1,550. Indeed, this sharp decline reflects a reconsideration of the risk coming from the geopolitical situation. It is not unusual that after an initial impulsive rally, the price slows down when investors are able to better weigh the real risk.
From a technical point of view, the bullion price is now challenging the key support level of $1,550, continuing the decline started yesterday. It will be a positive signal if prices can halt their fall on this level, otherwise – at least in the short term – gold could lose momentum, despite the main trend (long term) remaining strongly bullish.
Carlo Alberto De Casa – Chief analyst, ActivTrades
EUROPEAN SHARES
Shares rose almost everywhere across the world on Thursday, with most benchmarks registering recovery rallies following the highly anticipated comment from President Trump on Iran last night. Many traders welcomed the fact that Donald Trump, against all odds, softened his tone by preferring not to take any military response to the last Iranian attack, de-escalating the conflict between the two powers. This gave relief to stocks and other risky assets overnight, reviving market sentiment everywhere and registering a sharp decline on safe havens as a diplomatic solution to the conflict is now in sight.
The current calmer geopolitical tone, if it lasts, will allow stock traders to switch their focus back to data, in order to assess the health of the US economy, with the December Non-Farm Payroll looming on Friday. Meanwhile in Europe, the Stoxx-50 Index jumped following the opening bell, with almost every sector, except Energy and Real Estate, in green territory.
The DAX-30 Index in Frankfurt is the eurozone’s best performer by far as the market is now trading above 13,500pts after having cleared resistance at 13,445pts. The 21-day moving average is now rising again and the current rally may be extended to 13,700pts and 13,890pts on a short-term basis if prices manage to clear the psychological and technical level (38.2% Fibonacci) of 13,500pts.
DAX-30 Index chart
Pierre Veyret– Technical analyst, ActivTrades