ActivTrades’ Market Analysts have prepared for LeapRate their daily commentary on traditional markets for January 8, 2020. This is not a trading advice. See details below:
FOREX
The dollar swung widely against the safe havens of the yen and Swiss franc following Iran’s missile attack against American military bases in Iraq. However, despite the price volatility that followed reports of the attack, with dollar oscillations of 1% against the yen and 0.5% to the Swiss franc, the greenback is now up on the day against both safe havens. This is because the markets believe it is unlikely that the measured Iranian retaliation will lead to a tit-for-tat response from the Americans.
Ricardo Evangelista – Senior analyst, ActivTrades
GOLD
The gold price jumped to a new 7-year-high, well above $1,600, driven by traders’ impulsive reaction amid the increasing risk of a war between Iran and the US. Bullion’s rally is confirming the huge appetite for safe havens in the current scenario, with investors moving liquidity from stocks and other risk-on assets to gold.
The recovery in the last 24 hours is also confirming – as we anticipated in yesterday’s note – that the correction seen earlier this week (closing the gap up between $1,550 and $1,565) was only a consolidation movement rather than an inversion, as traders are still betting on further gains for gold.
From a technical point of view, the previous resistance at $1,587, which is the high achieved earlier this week, becomes a key support level and as long as the price remains above it, the outlook remains positive for gold.
Carlo Alberto De Casa – Chief analyst, ActivTrades
OIL
Oil skyrocketed following the Iranian retaliation. The barrel remains in a positive trend, as investors are seeing significant risk from the geopolitical scenario, with the supply side prone to disruption as a result of the escalation in tensions seen recently. With a strong bullish impulse, WTI jumped once again above $65 a barrel and Brent above $70 a barrel, before a new correction, however despite this small drop, the main trend remains positive.
Carlo Alberto De Casa – Chief analyst, ActivTrades
EUROPEAN SHARES
An uncertain wind blows over European equities this morning following Iran’s attack last night on US targets in Iraq, wounding more than 30 US soldiers. The attack took place as a response to last week’s US air raid which led to the death of Iranian General Soleimani in Baghdad. While the Iranian government quickly confirmed it does not seek any escalation, Foreign Minister Zarif also added the nation will defend itself “against any aggression”.
These rising geopolitical tensions had a strong impact on safe heaven such as gold, silver, Swiss franc and Japanese yen, however, share markets seem to be offering resistance to the news despite small corrective moves following the opening bell. All of EU benchmarks are drifting slightly lower today, with the OMX-30 in Stockholm registering the worst performance so far.
The DAX-30 index registered a rebound over the 13,105pts-13,115pts zone in early trading as there remain plenty of bull traders over the 13,100pts zone. However, a break-out of this level could drive prices back to 13,080pts and 13,065pts very quickly. That move could be sparked by the Trump administration’s response to the Iranian attack, depending on the tone Donald Trump will adopt during his speech expected later today.
DAX-30 index chart
Pierre Veyret– Technical analyst, ActivTrades