ActivTrades’ Market Analysts have prepared for LeapRate their daily commentary on traditional markets for January 20, 2020. This is not a trading advice. See details below:
FOREX
Quiet start to the week for the foreign exchange market, to some extent due to the holiday in the US, where the markets are closed, but also because of the lack of impactful news; at least so far. The one exception to this rule, within the G10 currencies sphere, is the pound, which is continuing its downward trend; down by almost 0.8% to the US dollar since market opening on Friday.
The weakness of Sterling is a result of a steady stream of headwinds, which included poor GDP numbers, dovish comments from members of the Monetary Policy Committee of the Bank of England and culminated on Friday with the publication of retail figures that were markedly below expectations. The pound is showing weakness because the UK’s economy is slowing down and a rate cut by the BoE is increasingly likely.
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD
The new week for gold has started with the rebound continue over from the final part of last week. Bullion is consolidating well above the support level of $1,550; a clear breakthrough of $1,562 will open space for further recoveries, with a first target at $1,577 and then resistance levels at $1,593 and $1,611, which is the 7-year-top reached a few days ago. The rebound of gold despite the strength of the greenback is confirming investors strong appetite for bullion.
Carlo Alberto De Casa – Chief analyst, ActivTrades
EUROPEAN SHARES
Shares slid slightly lower for the beginning of the week in Europe despite a positive but calm trading session in Asia overnight. This week begins on a much less volatile tone than what we saw on equity markets last Friday, thanks to thinner volumes due to Martin Luther King Day in the US. In addition to the lack of US investors on the markets, today’s calmer tone is also explained by EU traders digesting the initial trade deal signing as well as the recent set of reassuring data from both US and China.
Volatility has surged on oil markets overnight after a pipeline has been shut down by an armed group in Libya and Iraq halted output amid escalating tensions with the US. These geopolitical tensions sparked an immediate reaction on oil-related shares like airlines (British Airways, Air France, Lufthansa etc) and energy (Shell).
Apart from this bearish leverage, traders are now focusing on the next batch of earnings reports with Netflix, UBS, Hyundai, IBM and Procter & Gamble this week. Investors will also be looking forward to hearing from Christine Lagarde this week as the ECB will decide on rates and set out its plan for the next monetary moves.
Meanwhile, the Stoxx-600 keeps on being weighed down by utilities and media shares with the FTSE-MIB the worst performer. The market is currently trading below 24,000pts after a solid bearish drop right after the opening bell with the next significant level located at 23,900pts.
FTSE-MIB chart
Pierre Veyret– Technical analyst, ActivTrades