Investors sought the safety of safe-haven assets, selling the risk-heavy equities.
This came amid an increase in the Coronavirus cases outside of China. Besides some Asian countries, Europe is also being affected.
This led to an increase in safe-haven assets such as gold and US Treasuries.
German Business Confidence Improves in February
Business confidence in Germany, as measured by the Ifo institute saw modest improvement. For February, the business climate index rose to 96.1 during the month. This was up from a revised 96.0 in January.
The data underlined the fact that German businesses were unaffected by the impact of the virus outbreak. It also signaled a modest increase in the business sentiment from December.
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EURUSD Attempting to Rebound
The common currency is posting some modest gains into Monday’s close. This comes as the US dollar takes a pause in its rally.
With the Stochastics now showing possible renewed momentum, we expect that the EURUSD will maintain the upside bias for now. As long as the price level of 1.0839 holds, the next upside target is 1.0897.
Oil Drops as Investors Expect Lower Demand
Crude oil prices are trading weaker, down over 5% on Monday. The declines come on the back of newly reported cases on the virus outbreak. The economic impact is expected to hit demand for crude oil.
As a result, oil prices pared gains and are trading weaker.
Crude Oil Loses the Support
Oil prices plunged sharply, losing the support level of 51.65. This will push price action lower to retest the support at 50.00. A retest of this handle will likely stabilize the declines.
However, there could be scope for further declines. If oil prices bottom near 50.00, we expect to see a rebound taking place. But, under the current circumstances, this could take a while before prices turn bullish.
Gold Surges on Flight to Safety
The precious metal is up over 2% on the day. The gains were driven by investors bidding the safe-haven gold and other similar assets. This comes as France already reported a big drop in tourism.
Investors are starting to assess the big impact the virus outbreak is causing on various economies around the world.
XAUUSD at 7-year High, Shows No Sign of Easing
The precious metal touched a 7-year high on Monday as it hit 1689 before retreating intraday. The gains are driven by the investor fears of a widespread impact due to the virus outbreak.
In the near term, any dips are likely to attract new buyers into the market. If there is a rebound, then we expect the XAUUSD to hit the 1700 handle in the near term.
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