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Daily market commentary: The party is not over yet for oil price



FOREX

Early Tuesday trading can be characterised by a return to some sort of normality, after the euphoria that followed yesterday’s announcement that Pfizer’s vaccine trial delivered a 90% efficacy in preventing COVID-19. With investors already eager to take on risk following the end of all the uncertainty in the build-up and immediate aftermath of the US election, the announcement of the vaccine breakthrough provided an additional boost to this sentiment and propelled risk-related assets to unexpected highs. However, there is an interesting angle: despite the risk-on stance, the safe-haven US dollar recorded gains versus its peers which is the opposite of what it normally does when there is good news. The rationale behind this dynamic may be that an earlier than expected vaccine has the potential to halt the pandemic during the first half of 2021 and be the light at the end of the tunnel for the Fed’s overstretched accommodative policies.

Ricardo Evangelista – Senior Analyst, ActivTrades

daily market analysis

GOLD

The gold price was hit yesterday by news of the almost imminent release of a Covid-19 vaccine. Investors are now betting on a shorter crisis than previously expected with the coronavirus curse seemingly over within 12 months but is there too much optimism?

Markets reacted with significant rallies in all sectors, while bullion sharply declined by around $100. In just a few hours the price plummeted from $1,960 to a new test of the support level at $1,850. It seemed that at this point investors realized that central banks will still be forced to print money and the crisis is not over yet. Bullion rebounded once again, managing to keep alive the lateral trading range of the last few months between $1,850 and $2,070. A clear fall below $1,850 would represent a negative signal, while the first resistance level on the daily chart still seems to be placed at $1,930. Despite yesterday’s drama, the price may yet still remain in the lateral phase of the last few weeks.

Carlo Alberto De Casa – Chief analyst, ActivTrades

OIL 

The party is not over yet for oil price. The rebound started once the victory of Joe Biden became clearer is continuing with the news of Pfizer’s vaccine giving further fuel to the barrel with WTI trading above $40. Investors are expecting that this vaccine (maybe followed by others coming from other pharma companies) could shorten the crisis coming from the pandemic, which has been hugely detrimental for oil demand. It is no surprise to see both oil prices and the stocks of oil companies rebounding so positively.

Carlo Alberto De Casa – Chief analyst, ActivTrades

EUROPEAN SHARES 

European contracts ticked higher on Tuesday, alongside US Futures and most Asian markets, despite poor Chinese data overnight. Investors are now fully back on “risk-on” trading mode as they are now pricing the end of the coronavirus crisis following yesterday’s encouraging results from a vaccine developed by Pfizer. The fact Joe Biden is now pushing Congress to reach a deal on further stimulus measures is also adding to the current market euphoria. However, the battle has not unfolded yet as investors will still face uncertainty at the end of the week with central bankers from the UK, the eurozone and the US set to meet during the ECB forum on Thursday and on Friday with finance ministers from the G20 group. Technically speaking, most European benchmarks have cleared major resistances and unlocked further bullish potential as investors switch their exposure from defensive assets. The DAX-30 Index is still trading above 13,000pts with 13,150pts and the zone at 13,450pts the next targets.

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: The party is not over yet for oil price

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