ActivTrades’ Market Analysts have prepared for LeapRate their daily commentary on traditional markets for January 23, 2020. This is not a trading advice. See details below:
FOREX
The leading narrative in the foreign exchange markets is one of fear, amid concern that the virus causing panic in the Chinese city of Wuhan may have the potential to generate a global pandemic of yet unknown proportions. As headlines around the world focus on the prohibition of traveling for Wuhan residents, the Japanese yen, the ultimate safe-haven currency, continues to gain ground against the euro and the dollar, rising more than 0.6% over the last three sessions (see chart below).
The World Health Organisation will decide later today whether to declare a global health emergency. Should that be the case there will be more upside risk for refuge assets and further yen gains should be expected.
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD
The gold price is still dancing just above the support level of $1,550, as investors are waiting for further market movers. At this stage, the viral flu from China is not having any strong impact on bullion. From a technical point of view, the challenge between the weakness seen in the short term – which is mostly due to the strength of the US dollar and the general risk on scenario on the markets – and the bullish trend of the last few months is continuing.
Carlo Alberto De Casa – Chief analyst, ActivTrades
OIL
Despite the general risk on scenario, yesterday saw the oil price suffer a massive fall. Technically, the price lost the support level of $58, declining another 3%. The short-term trend remains weak, especially after the API report, which showed growing inventories, while the Chinese flu is bringing some concern about the possibility of a decline in demand.
Carlo Alberto De Casa – Chief analyst, ActivTrades
EUROPEAN SHARES
European equities slipped on Thursday following the really bearish tone set overnight by Asian shares, especially in China where the CSI-300 index had its biggest drop in decades. The risk aversion mood has been built on fears the deadly coronavirus from Wuhan could spread to other countries and, even more concerning, impact retailers and economic growth by extension. So far, the Stoxx-600 Index is being pulled down by mining shares ahead of today’s US crude oil inventories, which could spark more intraday volatility towards commodities and other USD assets.
In addition, investors are also awaiting Christine Lagarde’s speech as the ECB will decide on rates later today, with the traditional press conference that follows this decision likely to provide investors with more hints about the bank’s monetary policy and potential further dovish measures to come.
The DAX-30 Index is the worst performer so far as prices slip towards 13,450pts following the break-out of the 13,465pts level. The market is now likely to extend the current corrective move below 13,400pts as the 55 exponential moving average is reversing following a bearish cross.
DAX-30 Index chart
Pierre Veyret– Technical analyst, ActivTrades