GOLD-Volatility remains high

Gold seems to have found some stability after the liquidity collapse seen earlier this week and the price is reflecting this, with bullion moving between $1,595 and $1,640 while waiting for new directional signals. Volatility remains high but is lower than the levels seen last week. Markets are likely to price in the huge increase in liquidity which is going to be flooded into circulation by central banks to tackle this crisis and could represent a supportive element for the gold price.

On a separate note, we should also mention that logistical problems with physical deliveries will continue as the virus has interrupted the supply chain and this is something that suppliers won't be able to resolve quickly.

FOREX-EUR gained more than 3.5% against the USD

After four days of solid gains, during which the euro gained more than 3.5% against the dollar, the single currency is on the backfoot today and is down slightly against not only the greenback but also versus all other major currencies. Euro weakness can, at least to some degree, be explained by disappointment following yesterday’s EU summit. European leaders failed to reach an agreement on the issuance of the so-called ‘corona bonds,’ which in essence are a pan-European bond where all members of the single currency share the risk. Germany and Holland refused to step in and share the risk with their less well-off partners in the south of the continent. This lack of solidarity between north and south, rich and poor, is undermining the single currency as another eurozone crisis now looms on the horizon, with echoes of 2012. The spread between German and Italian bonds continues to increase, in a development apparently faced with some indifference by Northern European countries.

EUROPEAN SHARES-uncertainty remains the overriding sentiment

Share markets opened lower everywhere in Europe on Thursday as uncertainty remains the overriding sentiment and has pushed investors into taking any profits generated by this week’s recovery attempt. The fact remains that investors from around the world have welcomed the recent historical batch of monetary and fiscal responses to coronavirus and these measures have helped traders gain a clearer view and more certainty about the future of the global economy. However, most investors now fear the human and economic struggle against the deadly virus will continue further into Q2, Q3 and even possibly Q4, which would deepen the impact across all economies and drive some regions into a profound recession cycle. So far, markets in Europe are being driven lower by the mining, energy and the discretionary consumer sectors with companies like Linde and LVMH among the eurozone’s worst performers. Surprisingly, the FTSE-MIB is one of the most resilient indices so far in Europe with the market still trading above 16,560pts following a clearing of its bearish trendline yesterday while the RSI indicator, which is above its 50% zone, is showing a very short-term bullish pressure. 18,260pts remains the first target for the market while a fall below 16,560pts would open the way to new lows around 15,800pts and then 13,780pts.

OIL-The combination of coronavirus and the failed OPEC

Oil attempted to rebound earlier this morning but despite these dramatically volatile times, the price remains drowned by growing expectation of a huge oversupply. The combination of coronavirus and the failed OPEC+ deal is putting the barrel in an extremely dangerous situation. Technically, the first key resistance area has now been moved to $25, on the peak reached yesterday, while $23-$23.20 is an interesting area of support which is stopping further declines. However, any fall below this zone could generate renewed selling momentum. Many automatic stop losses are now placed below this level as investors are still expecting another return to $20-$21 amid the coronavirus crisis further degenerating and with it an even more severe hit to the long term demand for oil.

FOREX- new Covid-19 cases in the US is spiking

The dollar is down against the euro, the yen and the pound during early Thursday trading, as investors await the publication of the initial jobless claim numbers in the United States with some anxiety. It is widely expected that these numbers will be extremely high, potentially the worst in many decades due to the abrupt economic slowdown caused by the measures to contain the spread of the coronavirus. At the same time the number of new Covid-19 cases in the US is spiking, further weighing the greenback down. It is interesting to note that the dollar’s weakness is occurring despite the White House and Congress having reached an agreement on an economic aid package worth $2 trillion, reinforcing the idea that during these interesting times the virus is setting the agenda, not policy makers.

EUROPEAN SHARES-The bullish mood continues in Europe

The bullish mood continues in Europe on Wednesday with shares extending this week’s advance following gains registered overnight by Asian shares. Today’s boosted market sentiment comes from Washington as investors were happy to see the White House finally confirming an agreement on the Covid-19 response bill with the Senate and pushed prices higher. Even if we are seeing much less volatility on share markets than the weeks before, the trading environment remains blurry and it’s still hard to know if the current rally will turn into a proper recovery or a simple bearish market correction. Most European benchmarks are now getting closer and closer to major resistance levels and, with no significant progress on the fight against the deadly virus, we can expect a sharp reaction when the prices challenge these zones. 

All of the European indices are in green territory today with notable gains coming from London to Madrid, which are being driven higher by the financial, industrial and basic material sectors. The Stoxx-50 Index is trading above 2,800pts as well as reversing the trend of its 55-day moving average. However, the market will still have to breach strong resistance at 2,855pts to close the bearish gap opened at the beginning of March.