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Daily market commentary: Reports of successful tests for a coronavirus vaccine enhance global appetite for risk



FOREX

The euro is rising during early Wednesday trading, as positive sentiment is inundating markets. Yesterday, a Fed official hinted at the possibility of even more flexibility being needed in the American monetary policy. This was music to the ears of investors, meaning the Fed has no plans to change strategy in its unparalleled support to the economy.

There have also been reports of successful tests for a coronavirus vaccine, which further enhanced global appetite for risk. Among the leading currencies the euro is benefiting the most from this optimistic mood, hitting its highest level in four months versus the dollar. If the upcoming EU summit of leaders manages to deliver an agreement on the much-anticipated European recovery fund, there will be scope for further upsides for the single currency.

EURUSD chart

Ricardo Evangelista – Senior Analyst, ActivTrades

GOLD

“Risk on” continues to dominate markets yet despite this, the gold price is holding above $1,800, confirming the high investor interest for bullion. Technically, nothing seems to have changed with a first support zone at $1,790-$1,795 and a resistance level at $1,815. The positive correlation of the last few months between gold and stock markets movement is related to the fact that investors are increasing their share of stocks in their portfolio but at the same time want to have insurance in case of further market corrections and gold seems to be the perfect asset to play this role.

Carlo Alberto De Casa – Chief analyst, ActivTrades

daily market analysis

EUROPEAN SHARES 

European shares continue to trade higher on Wednesday, alongside Asian equities and US Futures, as vaccine hopes keep on fuelling the market’s current bullish sentiment. Moderna’s promising results from its vaccine trial have helped sustain market sentiment today, and this optimism even offset new cases of the virus spotted around the world.

However, the bullish potential may be limited on stocks in the near future as US-Sino tensions continue to escalate with President Trump ending Hong Kong’s special status, specifying the region will now be treated the same as the rest of mainland China.

This growing bearish leverage is expected to have an inevitable economic impact on both superpowers as it will halt US investments to China and limit the access of Hong Kong companies to US funding and transactions. While optimism remains for now, this resurging bearish leverage is expected to become increasingly important for traders in the coming weeks and is likely to put pressure on riskier assets.

STOXX 50 daily chart

Pierre Veyret– Technical analyst, ActivTrades


Disclaimer: opinions are personal to the authors and do not reflect the opinions of LeapRate. This is not a trading advice.

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Daily market commentary: Reports of successful tests for a coronavirus vaccine enhance global appetite for risk

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