Risk off sentiment prevails before the start of the EU session

Market players continue to avoid risky assets, but not at an extreme pace. The reason is the increased risks of a complete, national pandemic from the new coronavirus in China.

The stocks are down, which gives a boost to gold and bonds. For the currencies, this has a positive impact on the Japanese yen.

The US dollar remains mixed, with slight changes against its main competitors, the Australian dollar also remains quite weak before the start of the European session. AUD/USD also remains below the 200-year average, which is a precondition for additional technical sales.

Markets are responding to the threat of a virus in China, a fact. Just as they responded during the Ebola pandemic in October 2014. After the fears subsided then, markets recovered. It remains to be seen how the situation will develop and how investors will react.

For now, fear is driving markets, leading to a decline in risky assets.

Graphs: Used with permission of Bloomberg Finance L.P.

 Trader Martin Nikolov

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