Equity markets extended the declines from Friday’s close. The weakness comes as investors remain concerned about the coronavirus outbreak.
Cases have now been registered in the United States, France, and Australia, besides China. The possible outbreak of the virus outside the shores of China could potentially impact the global economy.
The Asian markets were closed on Monday due to the Lunar New Year.
German Business Climate Lower than Forecasts
The Ifo’s business climate data for January came in below expectations. The index fell from 96.3 in December to 95.9 in January.
Economists forecast an optimistic view that the index would rise to 97.0 for the month. Despite the declines, the Ifo institute said that the manufacturing sector was showing signs of a revival.
EURUSD Remains Muted
The currency pair is weaker, slightly extending the declines lower. But overall, price action remains flat. This comes amid not much of news to go by.
We still maintain that the EURUSD will be testing the 1.1000 level of support. A rebound off this level could see the euro attempting to retrace some of the declines.
Sterling Extends Declines Ahead of BoE & Brexit Deadline
The pound sterling saw no respite as it continued on with the declines from last week. Economic data was sparse on Monday. But, some big-ticket events are due this week.
These include the Bank of England monetary policy meeting alongside the January 31 deadline, when the UK will be formally leaving the EU.
GBPUSD Could Retest 1.3000 Support
The declines in the currency pair will see a move lower to the support area of 1.3000. This marks a retest of the initial breakout from the falling trend line as well.
As long as the 1.3000 support holds, we could expect the upside bias to build up. But with two big events lined up, there is scope for the currency pair to turn volatile.
Gold Prices Gains as Risk Sentiment Falls
Investors fled to the safe haven asset gold amid falling risk sentiment. The outbreak of the coronavirus threatens to impact the global economy.
For the moment, investors are focusing on the immediate concerns as they wait for further fundamentals to develop.
The Fed is due to meet later in the week.
XAUUSD Breaks Out to the Upside
The precious metal is posting gains after it broke past the minor resistance level of 1562.00. The minimum upside targets the previously established highs near 1594.
For price action to maintain the upside, gold needs to break past this level. Failure to break past 1594 could signal weakness to the bullish momentum.