Market Analysis

The yuan climbed

FOREX

The yuan climbed to its highest level against the dollar since July, hitting 6.8657 during the latter part of Monday’s session. The Chinese currency is drawing strength from what appears to be a smoother path ahead for the ongoing trade talks with the US; yesterday Washington dropped China from its list of currency manipulators, in what is seen as a gesture of goodwill ahead of tomorrow’s signature of the Phase One trade deal between the two economic giants. Trade data is also supporting the Chinese currency; figures published yesterday pointed at an overall growth in exports, signalling a more optimistic outlook and an end to the economic slowdown.

Ricardo Evangelista – Senior Analyst, ActivTrades


GOLD

Risk-on is once again dominating markets, as investors are seeing much less risk on the Iran/US situation compared to just a week ago. Moreover, the signature of the US/China Phase One trade deal seems to be a matter of days, or even hours, away. In this scenario, the gold price has fallen below the support level of $1,550, confirming the weakness seen in the last few days, after peaking above $1,600. From a fundamental point of view, the majority of elements which have driven the price recently seem to be solved or close to be and the price is reflecting this new scenario. Despite this, elements like dovish central banks, which are the main reason behind gold’s long-term recovery, has not changed at all, resulting in a conflict between a bearish short-term outlook and a bullish trend in the long-term.

Carlo Alberto De Casa – Chief analyst, ActivTrades

 

EUROPEAN SHARES 
European shares slid slower alongside US futures, despite modest gains registered by Asian equities overnight. While Asian stock investors welcomed the fact that the US administration is to lift China’s currency manipulator status ahead of the highly anticipated Phase One trade deal signing, European and American traders don’t expect a huge impact on most markets as the news was already largely priced-in. Investors in Europe and in the US have instead preferred to focus on this week’s earnings reports with financial giants like JPMorgan Chase & Co, Morgan Stanley and Blackrock kicking-off the season. In Europe, the Stoxx-600 Index is trading lower than yesterday with banks and chemicals shares registering the steepest declines. Markets are likely to see higher volatility today as many traders await the US inflation data for December, which will certainly provide investors with more clues towards the path the US economy is taking. In Europe, the worst performer is Spain’s IBEX-35 Index. The market is still inside its medium-term bullish channel with 9,460pts a major support for prices. The 21-period moving average is reversing and is now playing a resistance role with an extended corrective move could send prices towards 9,300pts on a short-term basis.

Pierre Veyret– Technical analyst, ActivTrades

 

 

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