Risk-Off Mood as Coronavirus Spreads

Nikolas Papas

Nikolas has been involved in the finance industry for over fifteen years spanning across Europe and USA with a depth of knowledge and experience within many aspects of the financial markets. Nikolas gained several years experience with some of the Europe’s leading Brokers, as equity analyst, and trader managing accounts for both Private and Corporate Investors. He enjoys both the fundamental and technical aspects of trading focusing on stock markets and all FX majors. Currently Nikolas provides analysis and comments to online financial publications. Educational background in Economics (BSc), and Finance (MSc).

Risk-Off Mood as Coronavirus Spread 

January 28, 2020

Indices in Asia tumbled on the first trading day of the week as the coronavirus spreads and shifts investors’ attention to safe-haven assets. Now there are 2744 coronavirus cases confirmed while the death toll rises to 80. Currently, 17 cities have been locked down in an attempt by the Chinese authorities to control the virus.  The Nikkei 225 finished 2.03% lower at 23,343. China, Singapore, and Australia stock markets were closed today.

European indices started lower. The DAX index is 0.54% lower at 13,442 ahead of the ECB rate decision. CAC40 is 0.29 lower at 5,992 while the FTSE MIB in Milan is 0.30% higher at 23,778. In London, the FTSE 100 is 0.50% lower at 7,534. 

coronavirus spreads
XAUUSD Daily Chart

In commodities markets, the crude oil price is under heavy selling pressure, giving up 2.29% at $52.95 amid global growth concerns after the coronavirus outbreak. Brent oil is 2.14% lower at $58.61 per barrel. Gold price trades 0.41% higher at 1,578 making fresh two week highs. The gold outlook is positive as the price is gaining momentum above $1560. The first resistance stands at 1,611 the recent high, while the support stands at 1,447 the recent low.       

Cryptocurrencies markets managed to rebound during the weekend, while today Bitcoin adds 0.10% at $8,595 hitting the daily low at $8,479 and the daily high at $8,675. Bitcoin momentum is positive now as the crypto pair trading above the 100-day moving average. Support for bitcoin stands now at $8,000 while the next support holds at 7,500.

On the upside, resistance will be met at 9,925 high and then at 10,000 round figure. Ethereum (ETHUSD) trades 1.09% lower at 165.83 with capitalization now at 18.29 billion, on the upside resistance for ETHUSD stands at 200 recent high while the support stands at 117.09 the previous week low. XRPUSD is 1.71% lower at 0.2263. Litecoin (LTCUSD) is trading 0.32% higher at 56.26. The crypto market capitalization is $228.69 billion.

In the Lookout: The Germany IFO Current Assessment came in at 99.1, below forecasts of 99.2 in January. The Business Climate came in at 95.9, also below estimates of 97. The Business Climate Index registered at 95.9.  

Trading Perspective: In the forex market, the US dollar index (DXY) trades 0.01 per cent higher at 97.89, the AUDUSD pair is 0.64% lower at 0.6781. NZDUSD trades 0.60% lower at 0.6563. USDCHF is 0.02% higher at 0.9710.

coronavirus spreads
AUDUSD Daily Chart

GBPUSD trades 0.17% higher at 1.3090 ahead of the Bank of England’s decision on Thursday. The first support level for the British pound against the US dollar now stands at 1.2578 low which if broken, might push the GBPUSD further down towards 1.20. On the upside, first resistance will be met at 1.3511 recent high.

EURUSD trades 0.03% lower at 1.1021 as the pair’s short term momentum has turned now negative. The pair pierced below the 100-day moving average and now sellers are in control. First resistance for the EURUSD stands at 1.1224 recent high. On the other hand, support is at 1.1016 today’s low and then at 1.10.

In euro futures, the open interest increased by 1.300 contracts and volume dropped by 82,800 contracts. 

USDJPY is trading 0.34% lower at 108.84, having hit the daily low at 108.72 and the daily high at 109.13. USDJPY will meet support at 105.43 the August low. On the upside, initial resistance for the USDJPY now stands at 110.28 January high.

USDCAD trades 0.28% higher at 1.3183, as the Bank of Canada the previous week kept interest rates unchanged. The USDCAD pair will meet first support at 1.2950 the recent low while the next support level stands at 1.29 round figure. On the flip side, resistance will be met at the 1.3066 the high from December 31st

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