Market caution returns ahead of Davos summit

Lukman Otunuga ForexTime (FXTM)

Asian shares slip on China coronavirus concerns

Annual World Economic Forum in Davos in focus

Macron and Trump call truce in digital tax dispute

Gold gains as safe-haven interest rises

Asian shares flashed red on Tuesday as concerns about the economic impact of a coronavirus outbreak in China drained risk appetite.

This unfavourable development could not come at a more critical time with many people expected to travel within China before the Lunar new year. The outbreak certainly presents an economic risk to China and its close neighbours, especially if tourism, air travel and other industries are affected.

Caution from Asia should hit European markets ahead of the World Economic Forum (WEF) in Davos, Switzerland. Business leaders, financial heavyweights and politiciansfrom across the globe will discuss key issues revolving around climate change and sustainable business. There could be some movement across stock markets if global trade developments and geopolitical risks are discussed during the summit.

Euro steady after Trump-Macron truce

In other news, the Euro held steady against the Dollar after France announced an agreement with the United States on a truce in their digitaltax dispute.

With the accordlasting until the end of 2020, this is a welcome development for the Eurozone as tensions ease between both sides. In regards to the technical picture, the EURUSD is trading around 1.1095 as of writing. A breakout above 1.1100 may open the doors towards 1.1170. Alternatively, a move back below 1.1080 could trigger a decline towards 1.1040.

Commodity spotlight – Gold

Gold is set to remain the prime destination for safe haven buyers this week as developments in China and caution ahead of the Davos summit dent risk sentiment. The precious metal is trading around $1566 as of writing and could challenge $1580 if risk aversion intensifies. A solid breakout above herewill most likely open the doors back towards $1600.

Author

Lukman Otunuga

ForexTime (FXTM)

Lukman Otunuga has been a Research Analyst at FXTM since 2015. A keen follower of macroeconomic events, with a strong professional and academic background in finance, Lukman is well versed in fundamental and technical analysis.

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