Daily wrap: Sell-off on equities and the dollar

We are witnesses of a considerable sell-of on the equity market in the last stock market session in most countries. However, tomorrow there will be a limited trading session in countries such as France, UK and the US. The sell-off today should be considered as rather profit taking, because there were positive signs from the market, for example good economic reading from the US and further information concerning trade deal between China and the US. According to both sides, the deal should be signed this or next week. 

During today’s session we could see a strong depreciation of the US dollar. The EURUSD currency pair has increased to the highest in more than 4 months, probably because of good sentiment coming from trade negotiations. EURUSD is considerably above 1.1200. 

Wheat prices continue a rally on Monday, reaching the $561 – the highest price in 2019! The price has gained over 20% since September lows amid optimism regarding the Chinese purchases as a part of the Phase One trade deal. Another factor adding to price gains is a possible export tax in Argentina which could redirect some of the purchases to the US. 

Weak dollar and sell-off on equities has brought gold prices higher. The price of gold has risen above 1500 in recent sessions and today the next important zone of 1515 is tested. 

The market is closed on Wednesday and the most important piece of data the next day is Caixin PMI in China. The Chinese PMIs could be the most telling as flash PMIs from Europe showed stagnation in December. Above that on Friday we will have US ISM manufacturing and surprisingly FOMC minutes in the evening.