ActivTrades’ Market Analysts prepared their daily commentary on traditional markets for March 6, 2020. This is not a trading advice. See details below:
FOREX
The dollar’s debacle continues, with losses of almost 3.5% in the last two weeks on the index that tracks the greenback’s performance . The threat posed by coronavirus to the growth of the economy is the underlying force driving the current dollar dynamic, as well as the measures being adopted to mitigate the fallout from the health crisis. Chief amongst these is the Fed’s monetary policy with the American central bank recently surprising many with an extraordinary rate cut of half a point, in a move unseen since the peak of the 2008 financial crisis. Therefore, the risk is now very much to the downside as far as the dollar is concerned as further stimulus may soon be needed and the Fed is the only central bank among its peers still with some room to manoeuvre.
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD
Risk off is dominating the short-term scenario and bullion has taken advantage of this rally to jump back to $1,680. The price is now less than 1% from its seven-year high and any further stock correction or dovish decision by a central bank could lift the price further yet. Another positive element for the gold price is the weakness of the greenback, with the Dollar Index continuing to fall. Vice versa, if markets are able to find a support and to build a solid rebound, gold could quickly slip back to $1,650.
Carlo Alberto De Casa – Chief analyst, ActivTrades
EUROPEAN SHARES
Share markets from Tokyo to London traded significantly lower on Friday with most benchmarks around the world flirting with their weekly lows. Market sentiment continues to be strongly weighed down as the spread of coronavirus gained momentum outside China. More than any monetary, fiscal or any other type of financial stimulus from central banks, investors now seem to be more hoping for a peak in virus cases in order to reduce the current lack of trust in stock markets.
It is very likely that any other important economic data, like today’s US Non-Farm Payroll or Unemployment releases, will be eclipsed by the current state of panic due to the spread of the deadly virus. In Europe the Stoxx-50 Index has been driven below the strong technical level of 3,300pts with all sectors in the red.
However, the industrial sector remains the most affected with companies like Airbus and Schneider Electric currently among the worst performers of the eurozone. More broadly, although the DAX-30 from Frankfurt, the French CAC-40 and the IBEX-35 of Madrid have similar bearish technical configurations, the steepest decline is on the FTSE-MIB from Milan. The market is now challenging the support at 21,000pts where a break-out could lead prices significantly lower, towards 20,740pts, 20,365pts and 19,755pts by extension.
FTSE-MIB chart
Pierre Veyret– Technical analyst, ActivTrades