ActivTrades’ Market Analysts prepared their daily commentary on traditional markets for February 7, 2020. This is not a trading advice. See details below:
GOLD
The US dollar is still by far the strongest currency on the FX market, with the euro/dollar recently reaching a 4-month-low. Despite this, the gold price is showing good resilience, holding steady $1,565 as investors wait for the US job data. The technical scenario has changed slightly, as graphically gold is better positioned and could now target $1,575. In other words, despite the risk-on scenario of the last few days, the environment for gold is still supportive and a clear break through of $1,575 could open space for another rally to the key threshold of $1,600.
Carlo Alberto De Casa – Chief analyst, ActivTrades
OIL
The risk-on scenario seen on markets in the last few days was unable to generate a robust rebound for the oil price. This is confirming the weakness that we are seeing on the barrel as investors are still betting on significant risks of overproduction in the coming months. Technically the oil price remains under pressure, especially after the break down of the support level of $51 seen in the last few days. The prices are still dancing around these levels, but the fact that there was no solid rebound confirms the current bearish trend, which can be stopped only by WTI climbing above $54.
Carlo Alberto De Casa – Chief analyst, ActivTrades
EUROPEAN SHARES
European markets had a mixed opening on Friday following an Asian trading session lacking a clear direction while US gauges point to modest declines at the opening. This uncertain market sentiment has several sources. First, investors are digesting poor German Industrial Production data for December which came in below expectations.
In addition, rising concerns about the coronavirus hit investors’ sentiment after Japan has found 41 additional cases on the Yokohama cruise ship. And finally, some traders may be tempted to take some of yesterday’s profits prior to today’s US job report where a significant increase is already priced-in. Despite these bearish factors, the risk-on mood remains robust this week as investors have become more and more optimistic about the impact of coronavirus on Chinese growth and sales.
However, a real downside risk to the market will be looming if the infection continues to spread past mid-February and further in Q2. For now, the Stoxx-600 Index is being led down mostly by miners and carmakers, while the DAX-30 in Frankfurt is the worst performer. The market consolidated close to its historical high slightly below the strong 13,600pts level. The first support is located over 13,515pts while the second one is close to the 21-period Exponential Moving Average, which is currently near the 23.6% Fibonacci retracement above 13,430pts.
Pierre Veyret– Technical analyst, ActivTrades