ActivTrades’ Market Analysts prepared their daily commentary on traditional markets for February 6, 2020. This is not a trading advice. See details below:
FOREX
Despite the increasing number of fatalities associated with the coronavirus, as well as concerns about the duration of economy-damaging travel bans, the yuan continues to recover against the US dollar and is on its third consecutive positive session during early Thursday trading. The yuan’s resilience may surprise some, but it is above all an illustration of how robust the positive sentiment in the markets is. While the economic impact of the measures put in place to contain the spread of the disease is severe, optimism won’t be shaken off, as investors look the other way and focus on the positives. Today’s positivity is the continued easing in trade tensions, after China announced the cutting of tariffs on a significant volume of US imports.
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD
Gold prices remain resilient even though a risk-on approach is still dominating markets. The support level of $1,550 was able to generate a solid rebound, with prices that are playing close to $1,660. Technically the situation is unchanged, with the first support level still placed at $1,550, while a rise above $1,562 could open space for further recoveries with a potential target of 1,575. The strength of the greenback and stock rallies, at least for now, are not supporting the gold price.
Carlo Alberto De Casa – Chief analyst, ActivTrades
EUROPEAN SHARES
Shares opened higher everywhere in Europe on Thursday with all sectors up on the Stoxx-600 index, extending yesterday’s gain. The appetite for higher-risk assets remains high and is even offsetting last week’s sell-off due to the coronavirus and its short- to mid-term impact on China’s economy, as well as its commitments regarding the freshly signed phase-one trade deal with the US. This optimism has been given another boost on Thursday after Chinese officials confirmed another tariff cut by 50% on $75 billion of US goods, effective this month (Feb 14), which lifts further uncertainty surrounding international trade.
Meanwhile in Europe, Christine Lagarde said this morning downside risks for the Eurozone were reducing and growth was in-line with the ECB’s expectations. However, the ECB also warned the low interest rate and low inflation environment has significantly reduced the Central Bank’s scope to ease monetary policy in the case of an economic downturn, which could be threatening in the medium term.
Further volatility is to be expected on share markets prior to tomorrow’s German Industrial Production data as well as the US job report for January where analysts and economists expect solid data.
Pierre Veyret– Technical analyst, ActivTrades