ActivTrades’ Market Analysts prepared their daily commentary on traditional markets for April 24, 2020. This is not a trading advice. See details below:
As the end of the week arrives, the dollar continues to emerge as the safe haven of choice for currency traders. During the early part of Friday’s session, the Dollar Index gained more than 0.3% as market sentiment remains gloomy.
The latest developments in coronavirus drug trials haven’t been satisfactory and officials around the world reiterate that a vaccine won’t be ready for deployment for months, maybe as long as a year, meaning the global lockdown is likely to, in one form or other, remain in place for the foreseeable future, dragging economies down. Bleak prospects for the economy arising from the coronavirus fallout aren’t helped by the ongoing oil price crisis and by the lack of decisiveness within the European Union, which yesterday once again failed to demonstrate decisiveness in its will to support the hardest hit countries, further compounding the risk-aversion that prevails in the financial markets.
Gold is steady at $1,728, close to its 8-year-high after new measures were announced by the ECB, which will be finalized in the first week of May. In this new world in which both the ECB and the Fed continue to unleash new stimulus packages, dramatically increasing the liquidity of cash, combined with a lot of uncertainty, gold will remain in high demand and playing a key role in any investor’s portfolio. Technically the trend remains bullish and a climb above $1,730 would open space for the price to test $1,747 again, with a good chance of a new high being recorded for this haven asset.
Stocks sank from Tokyo to London alongside US Futures with any positive market sentiment fading ahead of the weekend. Despite signs this week of progress in the fight against the deadly virus, investors have lost their appetite for riskier assets after a batch of poor economic data spread concerns on the severity of the impact coronavirus has had. More specifically, yesterday’s US unemployment figures combined with a disappointing EU Private Sector Activity report tempted investors to cash in any profits and limit their exposure ahead of the weekend. Market volatility is still likely to be high today as several significant data releases loom, in particular US Core Durable Goods Orders for March, which is due later today.
All EU benchmarks are trading lower with all sectors in red territory with energy and financial shares the worst performers. The SMI-20 Index from Zurich has proven more resilient than other indices so far and is still trading above 9,440pts. However the price is testing its bullish trendline as well as the 21-day moving average having previously failed to successfully break through the resistance zone between 9,615 and 9,685pts. The bullish trend is clearly slowing down, as shown by the bearish divergence between prices and the MACD indicator and any fall below 9,440pts could open the doors to a deeper correction towards 9,180pts today.