Risk sentiment falls on the impact of Coronavirus
Equity markets were trading in the red into Friday’s close. The declines came partly as investor concerns rise on the impact of the Coronavirus breakout. Yields on the 10-year treasuries also increased, underlining investor concerns.
Euro Maintains Declines, Brushing off PMI Data
The euro currency continues it declines, set off by the ECB meeting on Thursday last week. By Friday’s close, the Euro was down by about 0.25%. Flash PMI’s for January from IHS Markit were better than forecasts. Private business activity was picking up momentum during the month. But the euro failed to capitalize on the data.
EURUSD is on Track for a Decline to 1.1000
At the current pace, the common currency is on track for a test of support near the 1.1000 level of support. Price briefly rebounded but the gains were quickly rejected above 1.1050. A test of the support area near 1.1000 will signal a possible rebound given its psychological importance.
UK Manufacturing and Services Activity Rebound in January
Flash estimates from Markit in regards to the manufacturing and services activity saw a modest rebound. Manufacturing activity rose to 49.8 while services PMI rose to 52.9. On both counts, the data beat the forecasts. But the sterling ignored the report and reversed gains.
GBPUSD Pares Gains, Moving Back into the Range
The currency pair gave up the gains after initially breaking out above 1.3100 level. With price settling back below this level, we anticipate a sideways range. The currency pair could remain range bound within 1.3100 and 1.2960 once again. But the downside remains limited for the moment.
Gold Posts Modest Gains as Equities Rally Pauses
The precious metal was once again attempting to post some gains with some degree of success. Gold prices rose by over 0.50% percent into Friday’s close. The gains came as risk sentiment is fading. Equity markets remain rather flat right after charting into new highs.
XAUUSD Could Rise Further if Support Holds
Gold prices broke past the temporary resistance area of 1562. This triggers the bullish ascending triangle pattern. If prices retreat, then the 1562 level could act as a support. This will open the upside to a minimum target of 1600 once again. But failure to break past previous highs could keep gold trading flat near the top.