Daily thread to exchange ideas and to share your thoughts
Good day, everyone! Hope you're all doing well as we get things going in the European morning session today. It's been a decent start to the day with risk aversion in markets being the main theme so far amid fear of the new coronavirus outbreak in China.
That has weighed on equities as investors chase safety assets with bonds and gold gaining some ground. In the currencies space, USD/JPY is keeping lower back under 110 with the aussie also struggling a little as the risk mood is softer in trading today.
This is arguably the first significant negative catalyst in markets since the US and China put pen to paper on a trade deal last week. So far, markets are reacting in a similar way as it did to the Ebola virus outbreak back in October 2014.
However, with some quarters of the market perhaps looking for a reason to take money off the table, this may help give a bit of a nudge in that direction. But I reckon it'll take more to really spur that conviction so my best guess would be to look towards earnings.
That said, key tech players will only report next week so that will provide the next best indication on how risk and markets will react in the near-term.
For today, it is likely that the virus contagion fear will override trading sentiment in the market. So go grab a drink, kick your feet up, and wait for the fear to be overblown.
Fading the fear has always been the best way to go about this and unless this turns to be a real pandemic, markets should react in a similar manner once again.
What are your views on the market right now? Share your thoughts/ideas with the ForexLive community here.
