ActivTrades’ Market Analysts have prepared for LeapRate their daily commentary on traditional markets for January 21, 2020. This is not a trading advice. See details below:
FOREX
The yuan is down more than 0.4% against the US dollar during the early part of Tuesday’s session, as fears grow over reports of a new SARS-like virus identified in China, causing pneumonia and transmittable from person to person. The reported impact of the virus is, so far, limited but the number of infected continues to grow, with 4 already confirmed dead. In a country recently affected by the worst ever epidemic of pig flu, which had a marked economic impact, the latest news triggered a mood of risk aversion in the markets, leaving the yuan under pressure.
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD
Gold is languishing, with the price slowing down to $1,555 as it suffers amid the strength of the US dollar and the weakness of the commodities sector. From a technical point of view, the first key support remains $1,550, as the prices waits for geopolitical news and central banks to provide further directionality. Despite the correction seen this morning, the volatility on bullion price remains moderately low, with investors in a wait and see mode, after the big rally of the last few weeks.
Carlo Alberto De Casa – Chief analyst, ActivTrades
EUROPEAN SHARES
European markets opened on a dovish tone, alongside US futures, after Asian stocks sparked the trend overnight. Today’s global risk-off trading stance follows negative developments in Hong Kong (credit rating downgrade) and growing concerns about a new deadly coronavirus in China. These two negative leverages were enough to lead investors to take a break, and some profit, after the recent run of good news for global stocks (strong start to earning season and initial US-China deal).
However, in addition to the worrying developments from China, the Stoxx-600 Index is also being weighed down by the financial sector, particularly after UBS disappointed investors by falling short on key profitability levels and cost targets.
Tech shares are also among the worst performers today as the French GAFA tax continues to worsen the US-EU trade relationship despite attempts from EU trade chief Hogan to ease tensions between the two economic areas. All sectors are down on the Eurostoxx-50, with the German DAX-30 and the CAC-40 in Paris the worst performers.
The CAC-40 Index is testing its first available support level, near the 23.6% retracement above 6,010pts. A break-out of this level could pose a serious threat to the current bullish trend with the next support down at 5,950pts.
CAC-40 Index chart
Pierre Veyret– Technical analyst, ActivTrades