Strong risk appetite dominates the sentiment of traders during early Monday trading, with the safe-haven US dollar losing ground to other major currencies. Investors feel encouraged by positive data released overnight in Asia, showing that Japan is no longer in a recession, and China also posting encouraging industrial and retail numbers for October. These good pieces of news come on the back of the boost to international trade provided by the deal signed on Sunday by 15 Asian countries. As we reach the final stretch of 2020, by any measure a very tough year, investors can start to see a light at the end of the tunnel, following last week’s vaccine announcement and now a string of encouraging data and announcements from Asia.
The general enthusiastic scenario is supportive for oil prices, which started the new week still in green. Markets are still in full risk on mode with investors betting on a vaccine and with it a relatively quick solution to the pandemic and this optimism is boosting oil. Sectors previously left behind, such as energy, are now enjoying time in the limelight and this is pulling up the price of both WTI and Brent.
From a technical point of view, WTI is again facing resistance at $41.50. A clear breakout above this level, could open space for a rebound to the peak of early September around $43.20-$43.50.
Stocks traded higher, from Tokyo shares to US futures contracts, buoyed by rising risk appetite from investors at the beginning of the week. While last week’s vaccine announcement renewed bullish sentiment on most stock markets, another boost has been given over the weekend with the signing of the Asian trade deal on Sunday. Of course, investors welcomed the news as this trade agreement will involve some of the world’s biggest economies and most densely populated areas in the globe, but that’s not all. Investors were also glad to see President-Elect Joe Biden’s adviser oppose a national US lockdown, despite surging virus cases. This announcement has been well received by most traders as it allows them to keep their eyes on the reopening of economies and, more generally, the end of the crisis. This bullish trading stance is likely to remain for a while yet as investors welcome reassuring macro data from China, Europe and the US. However, short-term price action sparked by rising volatility may still occur in Europe as Brexit talks get more fraught as we step ever closer to the latest deadline.
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.
Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.