European markets open the week in heavy selloff on worries over a new strain of coronavirus discovered in the UK, which was seen as “out of control” by the Health minister. At the time of writing, DOW future is also down around -500 pts. Dollar is staging a broad based rebound on risk aversion today, followed by Yen and then Swiss Franc. Commodity currencies are trying to overtake Sterling as the weakest ones. Though, the Pound has the “quality” to tumble further as Brexit trade negotiations remain unresolved.
Technically, AUD/USD’s break of 0.7507 support indicates short term topping at 0.7639. USD/CAD’s breach of 1.2928 resistance also suggests short term bottoming at 1.2688. But these developments are not confirmed by equivalent moves in other pairs yet. Eyes will be on particularly on 1.2058 support in EUR/USD and 1.3134 support in GBP/USD. Similarly, EUR/JPY and GBP/JPY are also holding above 125.70 and 136.78 support respectively.
In Europe, currently, FTSE is down -2.67%. DAX is down -3.08%. CAC is down -3.09%. Germany 10-year yield is down -0.027 at -0.596. Earlier in Asia, Nikkei dropped -0.18%. Hong Kong HSI dropped -0.72%. China Shanghai SSE rose 0.76%. Singapore Strait Times dropped -0.09%.
WTI crude oil in deep retreat, short term top in place ahead of 50
WTI crude oil drops sharply today, following broad based risk aversion. Considering bearish divergence condition in 4 hour MACD, and the proximity to 50 psychological level, a short term top could be formed at 49.25. Break of 45.66 support will confirm this case. Deeper correction would be seen to cluster support level at 43.50, 38.2% retracement of 33.50 to 49.25 at 43.23. Nevertheless, strong support from 45.66 could set the stage for another take on 50 before topping.
Gold rally capped by overall risk aversion, but further rise still in favor
Gold edged higher 1906.74 earlier today quickly turned into a deep retreat, follow global risk aversion. Though, downside is contained well above 1819.05 support so far. Thus, near term outlook stays cautiously bullish. We’re holding on to the view that corrective fall from 2075.18 has completed at 1764.31 already. Above 1906.74 will resume the rebound from 1764.31 to 1965.50 resistance next. Firm break there will further affirm this bullish case and target 2075.18 high.
However, break of 1819.05 will keep gold inside near term falling channel. That would also extend the correction from 2075.18 with another fall through 1764.31, before completion.