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European Open – Trump, Davos, UK Jobs, Gold, Oil

Published 21/01/2020, 11:52
Updated 05/03/2019, 12:15

Trump Davos Speech Eyed

Stocks are lower across Europe on Tuesday as the week gets properly underway with the return of the US after the bank holiday and start of the World Economic Forum in Davos.

The event in Davos is what we’re going to see splashed across the TV’s for the next few days as the best and brightest (and a few others) dust off the ski jackets and hit the slopes. There’ll be no shortage of interviews over the coming days from a variety of CEO’s, politicians and central bankers and traders will be waiting with one hand on the mouse.

Naturally, Donald Trump’s speech will have a large audience around the world as everyone looks to get a glimpse of where he’ll turn his attention to next, after signing the partial trade deal with China last week.

A conflict with Iran has already kept Trump busy in the opening weeks of the year but we may get a much better idea of how busy the President intends to be this year. It would be understandable if Trump wanted to take a step back from confrontation on the international stage and focus more on events at home with it being an election year but with the President, you never know. Perhaps we’ll find out soon.

UK jobs eyed as BoE ponders rate cut

Here in the UK we’ll get another update on the economy this morning, this time from the labour market, which is expected to show unemployment remaining steady at 3.8% and earnings growth slowing slightly but remaining above 3%. The figures we saw last week on inflation, retail sales and manufacturing were disappointing, to put it mildly, and clearly got the attention of policy makers.

The Bank of England will meet next week and odds of an interest rate cut have shot up from almost zero where they were earlier this month. The data didn’t help but may have been more overlooked, given the proximity to the election and Brexit, had it not been for the commentary that appeared alongside them. The meeting next week is now very much live, which is keeping sterling under some pressure. The jobs data this morning could be the final nail in the coffin.

Gold rallies being sold into

Gold has shown some bullish promise over the last couple of days and while it has spent some time above $1,560, it’s continuing to attract the sellers at these levels rather than be the catalyst for another jump higher. This period of consolidation therefore continues to look weak for the yellow metal, which suggests we could see $1,540 coming under pressure again in the not-too-distant future. That may well depend on the dollar’s ability to build on its strong start to 2020 and with the data we’re seeing from the US, there’s clearly a case for it.

Libya spike quickly wiped out

Oil prices are slipping again today, having quickly reversed the early week spike on the back of an outage in Libya. All gains have now been wiped out and Brent is trading around $64.50 threatening another run at the January lows. In a market flooded with oil, it shouldn’t be overly surprising that the short rally was quickly sold into, the question now is whether it stays range-bound in the mid-60 region or eyes early December lows.

Disclaimer: This article is for general information purposes only. It is not investment advice, an inducement to trade, or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. Ensure you fully understand all of the risks involved and seek independent advice if necessary. Losses can exceed investment.​

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