Market Analysis

The European markets opened lower

FOREX

Wednesday started with subdued trading on forex, as most currency pairs remain within tight ranges. It is expected that later today the US and China will sign the Phase One trade deal; a momentous occasion but by no means the end of the dispute between the two trading powers, which is expected to continue albeit in a less aggressive way. Nevertheless, it is a highly anticipated occasion and it appears that no one wants to blink and miss it, which perhaps explains the relative quietness of the currency markets during the early part of today’s trading session.

Ricardo Evangelista – Senior Analyst, ActivTrades


GOLD

There is more caution surrounding the deal between the US and China. Phase One is going to be signed in the next few hours, but investors were expecting more from this part of the agreement. The hypothetical Phase Two will take time and there is now no certainty on this. For this reason, it’s very little surprise to see gold in green, recovering to the threshold of $1,550 The price is now playing with this key level, waiting for further directional signal in a short-term scenario still marked by risk-on.

Carlo Alberto De Casa – Chief analyst, ActivTrades

 

EUROPEAN SHARES 
European markets opened lower on Wednesday, following the trend established overnight by most of Asian shares, after a risk-off wind blew across the world. Despite the good news of the awaited Phase One trade deal signing due later today, investors’ enthusiasm has been killed after Washington recently adopted an offensive tone towards China. The Trump administration confirmed the current set of tariffs on $360b of Chinese goods won’t be lifted before the result of this year’s US presidential election in November despite this initial trade deal. Sources close to US officials also added the Government was close to publishing a new rule that will increase its power to block foreign-made goods sales to Huaweï, adding even more tension ahead of today’s signing. Finally, market sentiment is also being impacted by escalating tensions in the Middle East after Iranian President Rouhani said US forces were not safe in the region today and that EU forces may also be concerned soon. This complicated and unclear macro landscape makes trading difficult for stock investors, with a real risk of a volatile but directionless trading day. All the eurozone markets are down with Italy the worst performer with the FTSE-MIB of Milan trading slightly higher than its major short-term support at 23,700pts. British shares are the best performer, which are benefiting from dovish remarks from the BoE that could see further rate cuts in the near future. The FTSE-100 Index is trading close to its first available resistance at 7,630pts, a break-out of this zone could drive prices up to 7,670pts on a very short-term basis.

Pierre Veyret– Technical analyst, ActivTrades

 

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