Date: 15 May 2020
Risk aversion remains the prevailing sentiment in the markets, supporting safe havens and penalising risk related assets; this dynamic is well illustrated by the performance of the euro versus the Swiss franc. Following the declarations of President Trump yesterday, threatening to pull out of the phase one trade deal with China, the franc reached 1.05038 versus the single currency, the highest in 5 years. Apprehension surrounding a potential second wave of the coronavirus was already dampening the spirits of investors, that had nevertheless found reasons to be hopeful in the partial lifting of the lockdown across Europe and America; now these fears are being compounded by Donald Trump’s latest aggressive tirade towards China, with the markets posture indicating that, faced with the worst economic contraction since the second world war, a reignition of trade tensions between the US and China is the last thing the world’s economy needs
Ricardo Evangelista – Senior Analyst, ActivTrades
Gold is at its forth positive day in a row and, technically, we could be close to a new upside breakout. Bullion spot price is playing with the resistance mentioned in previous reports at $1,730/1,735 and is attempting to break through this level. From a technical point of view, a close of the week above this threshold would be confirmation of the bullish environment and we could see more buyers entering the markets above there, while we would only have a weak signal only below $1,680. We are now in the upside of the lateral channel seen in the last few weeks and buyers are still very active on gold, continuing to push prices up close to the 7-year-high for bullion.
Carlo Alberto De Casa – Chief analyst, ActivTrades
European markets showed volatility as they edged higher on Friday as traders weighed up the mixed data from China overnight. Investors were pleased to see the Chinese Industrial Production topping estimates for April but were disappointed by the drop in Retail Sales which highlighted the weakness of demand in almost every sector, and remains the strongest bearish leverage to stocks at the moment. Deepening tensions between the US and China, as President Trump ruled out any imminent talks with Xi Jinping, further added to the current ambient uncertainty ahead of the weekend. However, on a more positive note, there are signs of stability across oil markets following Saudi Aramco’s decision to cut sales to its key buyers and rumours of tighter supplies from other counterparts. The IEA view that oil markets were showing “signs of improving” has boosted market sentiment towards Energy shares, making it one of the top performing sectors in Europe this morning. Despite today’s bullish opening, traders are likely to stay cautious ahead of a new batch of significant US data, with the highly anticipated Retail Sales report for April, looming in the afternoon.
The DAX-30 index has rallied this morning with prices now trading close to the 10,500 pts level following another solid rebound over 10,200 pts. However, the market will have to clear the 10,560 pts level in order to invalidate its very-short-term bearish trend and get back to its previous highs towards 10,770 pts and 10,980 pts by extension.
Pierre Veyret– Technical analyst, ActivTrades
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