Diverse information on the coronavirus keeps the world’s major trading platforms busy. There are fears that the spread of the virus in China and beyond will have a much greater negative impact on the world economy and the financial results of some companies than expected.
Chart of the day EUR/USD
On Friday, most of the trading floors closed in the negative. The S&P500 lost just over 1%, Dow Jones 0.8%, and DAX 0.62%. Fear in the markets is increasing. There is no cure for coronavirus, and the uncertainty about the epidemic threatens the entire world economy. Although the US economy showed slight signs of an easy recovery in early 2020, preliminary estimates for March indicate that the recovery is fading again. There are no signs that the risk of a recession is diminishing.
Last week the Euro showed the lowest values in the last three years. As we expected, the strong oversold Euro together with the weak US business index data gave its results. Large purchases on Friday returned the Euro above 1.08 and a good report on European PMI kept bullish sentiment.
Probably, at the beginning of the new trading week, the Euro will continue to grow, and we will be able to see how the markets are adjusted for the future.
Gold continues to hit past highs and does so with great confidence. In just one Friday, the price of the precious metal increased by almost 2%, indicating a fairly strong shift of investors from risk assets to safe haven assets. Until the level of danger of coronavirus spreading in the world, which has a direct impact on all spheres of the world economy, the trend will continue. The target of $2,000 per ounce is no longer seen as some kind of clouds.
After a week of growth, the initiative went back to the sellers. As the oil price is denominated in U.S. dollars, a bullish rally in the U.S. currency a priori has a negative impact on demand. The sellers were on the side of the data on changes in oil reserves in the USA. At the last OPEC meeting it was not possible to reduce oil production to balance losses from the coronavirus influence. The next meeting will be held in early March, where it is possible to take a decision on production reduction.
What’s waiting for us today?
10.00 IFO Business Climate Index in Germany.
10.00 Index of business expectations in Germany.
14.30 Wholesale volume in Canada
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