Daily Market Charts and Analysis January 31, 2020

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Market Charts and Analysis

Here are the latest market charts and analysis for today. Check them out and know what’s happening in the market today.

GBPJPY

The pair traded in the green in recent sessions, although the movements were capped and limited. Against the safe-haven Japanese yen, the movement was up although traders appear hesitant to commit fully as the markets await the Bank of England’s interest rate decision. Analysts are divided over the outlook of the British pound over the coming weeks. According to survey of economists, the BoE will choose to leave the bank rate unchanged at 0.75%. However, the financial market pricing suggests more than a 50% chance of a rate cut being announced. Analysts aren’t sure what that might mean for the currency. The UK’s economic growth slipped to just 0.6% in the year to the end of November. It was far lower than the full-year forecast of the BoE and also lower than the 1.25% expansion that the economy needs to generate inflation. It’s a problem for the bank because it also means the CPI slipped 1.5% to 1.3% in December, far from the 2% target.

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CADJPY

The pair is trading in the green now, but the Canadian dollar bulls aren’t committing much on the upside, with price movement largely trading within ranges below the 50-day moving average and just above the 200-day moving average. The risk aversion is rampant around the world and traders aren’t only putting on their face masks but also keeping their bets in safe currencies, like the Japanese yen, amid the Wuhan coronavirus scare, which has claimed 170 lives as of January 30. This is a 28% increase from the previous day. India and the Philippines have both announced their first confirmed cases of the coronavirus infection, while Russia is shutting its borders with China. Meanwhile, the Canadian is getting a bit of breather after the World Health Organization (WHO) praised China’s prompt actions to prevent the spread of the coronavirus outbreak. Also, the organization already declared the Wuhan coronavirus as a public health emergency.

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GBPCHF

Against the Swiss franc, the British pound is similarly gaining although capped. It is trading in between the 50-day moving average on top and the 200-day moving average below. Meanwhile, for the Swiss franc still retains its shine against other currencies thanks to the safe-haven appeal as traders fearful of geopolitical risks. Although recession fears have declined, the Swiss franc kept marching upward because investors see the currency as a geopolitical risk shield. That’s particularly true given that the year started with a heightened geopolitical tension after the United States killed top Iranian commander Qassem Soleimani, gaining Iranian response. And even though an interim trade deal with China has been signed by the US, the index for geopolitical risk still remains higher. Gold and the Swiss franc have become stronger than the yen during periods of military conflict too.

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EURAUD

The euro outperformed the Australian dollar, which has been underperforming the market for some time now. Over in the eurozone, the economic sentiment strengthened in January with the European Commission’s Economic Sentiment Indicator increasing to 103.8 from 101.3 in December. This reading came in better than the market’s expectations of 101.8. Details also showed that the Consumer Confidence Index remained unchanged at -8.1 as expected. Meanwhile, the Industrial Confidence Index climbed to -7.3 from -9.3. The Services Sentiment Index inched lower to 11 from 11.3. The German and French industries became a lot more optimistic about the outlook and somewhat less pessimistic about recent production developments. These may be taken as signals that the bottom in manufacturing is getting close.  Still, the uncertainty surrounding the impact of the Wuhan coronavirus still looms large.

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