Market Analysis

The yuan gained more than 0.25%

FOREX

The yuan gained more than 0.25% to the US dollar, following the publication of positive Chinese inflation data and the return to work of millions of workers. The Lunar New Year holiday was extended in an effort to halt the spread of the coronavirus, which had a big economic impact in China, so it’s not surprising that a return to business as usual has helped to lift investor sentiment towards the Chinese currency. However, the spreading of the virus appears to be far from contained within Wuhan and further yuan weakness can be expected should new major outbreaks of the disease arise in other large urban centres.

Ricardo Evangelista – Senior Analyst, ActivTrades


GOLD

Gold traded above $1,570 as investors’ appetite for bullion remains strong with the fact the recovery has come despite the strength of the greenback confirming this scenario. The gold now faces the resistance level of $1,575 and a clear surpass of this level could open space for further rallies, with a first target of $1,600.

Carlo Alberto De Casa – Chief analyst, ActivTrades


OIL 

The oil price is continuing its slow dance around the key threshold of $50, with WTI unable to build any solid positive momentum. The spread of the coronavirus is leaving open many questions about the real impact of this epidemic sickness on the economy over the next few months. Investors are extremely cautious before taking any long position on the barrel, as it could be one of the worst affected assets if the virus spreads further. Oil’s weakness was confirmed last week with the price unable to rebound despite the return of a risk on attitude.

Carlo Alberto De Casa – Chief analyst, ActivTrades

 

EUROPEAN SHARES 
Markets opened lower in Europe on Monday, following the trend set by most Asian benchmarks while US futures are pointing to a steady open after last Friday’s end-of-session decline. Market sentiment remains weak today, despite a Chinese CPI release topping estimates earlier this morning, as investors prefer to stay cautious after the latest development on the coronavirus. The death toll has now hit 910 while the number of people infected topped 40,000 during the weekend with more and more cases registered outside mainland China and still no sign of a peak. This situation starts to have a serious impact on investors’ trading stance as the negative consequences to worldwide economies may linger further into Q2 if the virus continues to spread. Chances of an extended rally on safe havens like gold, silver, CHF, JPY and other alternative assets such as cryptocurrencies are likely as traders may prefer to diversify their exposure to fight against the current uncertainty while central banks from emerging markets have already taken measures to insure certain liquidity levels this week in order to reassure investors. Travel and media shares are currently driving the Stoxx-600 Index lower in Europe with the DAX-30 index the worst performer so far. In the meantime, investors will focus on a new batch of corporate earnings with Cisco Systems today and Alibaba, Credit Suisse and Nestle later this week.

Pierre Veyret– Technical analyst, ActivTrades

 

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