The euro is recording gains versus the dollar and other refuge currencies, like the yen and the Swiss franc, as investors turn their backs on safe havens, boosting risk related assets in early trading on Tuesday. The fact that an increasing number of countries are easing lockdown measures, as well as news that a coronavirus vaccine has entered the trial phase, are feeding the positivity in markets and supporting the single currency.
EURUSD chart
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD
The gold price is steady at $1,730 in a scenario where investors are looking for fresh stimuli to move markets. The risk on approach seen on stocks in the last few days pulled down the price, which is now close to the key level of $1,725. Only a clear recovery of $1,750 would open space for further rallies, while a decline below $1,725 would increase the likelihood of another test of $1,700 and potentially down to $1,671-$1,675, where there is a strong static support.
Carlo Alberto De Casa – Chief analyst, ActivTrades
The oil price is consolidating, while the July expiry is challenging its recent high of $34.50. The positive mood seen in the stock markets is pulling oil up with markets now revising downwards the risks from coronavirus. The current price seems to reflect that markets are viewing the risk of a second wave as being relatively low, or at least investors are betting that this will not generate further closures and lockdown. The huge contango seen in late April is now much smaller with the market seeming more balanced. However, this situation could change quickly as there remains a large amount of uncertainty.
Carlo Alberto De Casa – Chief analyst, ActivTrades
EUROPEAN SHARES
Global stocks edged higher on Tuesday as the optimistic trading stance persists despite lingering political tensions between Washington and Beijing. Investors welcomed the nuanced tone China had towards Hong Kong after it said the island’s judiciary system will remain independent from the mainland and this helped to ease recent tensions.
However, the market’s current strong bullish momentum mostly comes from reassuring news on the virus front as signs of a slowing infection rate are being recorded almost everywhere. Even if other risks (political, second wave) shouldn’t be completely ruled-out by traders, the bet of an economic recovery is clearly boosting market sentiment this week. This is reflected in the fact that the top movers on European benchmarks come from the energy and financial sectors.
While the rise of mining and energy shares is largely a reflection of the recent price stabilisation of black gold, the rally registered by financial companies shows a growth in investors’ confidence in an economic recovery from a short-term prospective.
Today’s best performance comes from the FTSE-100 Index as the UK moved closer to a reopening and is now ready to get back to business. The price cleared resistance at 6,080pts, with this level now playing a support role for the market. The index is now likely to head to 6,170pts and 6,210pts by extension.
