As investor sentiment across the markets remains gloomy, following further losses in Asia, European stocks opened lower on Thursday. However, Chinese equities managed to stabilize due to supportive measures taken by the domestic authorities amid the spread of the coronavirus. The outbreak has reached at least 44 countries for now, with more new cases now being reported outside China than within it. So far, nearly 3,000 people have died. In Europe, France, Spain and Germany reported increases in cases, following an outbreak in Italy, where more than 400 people have been infected.
Moreover, as concerns spread to the United States, Trump named Vice President Mike Pence his point person to coordinate the government’s response to the outbreak, expressing confidence that the United States would prevent a widespread domestic outbreak. Still, his statements did little to alleviate the selling pressure in the markets.
Meanwhile, the greenback came under the downward pressure on Thursday amid rising bets on a Federal Reserve rate cut due to the growing recession threat. Also. The former Federal Reserve Chairwoman Janet Yellen warned that the coronavirus outbreak could likely steer the US economy towards a recession, which added to the negative sentiment surrounding the US currency.
As such, EURUSD extended the recovery to the 1.0950 local resistance for the first time in over two weeks. Should the pair confirm a break above the 1.09 handle, the short term technical picture will improve further. The possibility of the above mentioned resistance breakout depends on the upcoming economic data out of the Unites States, including the GDP numbers.
As for commodities, gold prices are slightly higher after a volatile trading on Wednesday. The precious metal received support around $1,625 and trimmed recent losses, continuing to challenge the $1,650 region. The upside momentum looks limited after a rejection from recent long-term highs. Still, the persisting risk aversion and a weaker dollar continue to point to the upside risks for the bullion, at least in the short term.