Discovering the vaccine
One of the main topics in the past few weeks remains a phased plan for most countries to exit the quarantine measures. But as we can see now, business activity is still very weak. Nevertheless, investors are optimistic, because a number of large companies have announced some positive results regarding vaccine testing. As a result, the US stock market has returned into positive territory, and we are also seeing a general strengthening of risky currencies such as AUD and NZD.
Let me remind you that yesterday the US published consumer confidence figures, which, unfortunately, came in under expectations, thereby once again confirming that the recovery process will take a lot of time. As a result, we observed a moderate weakening of the USD along with most currencies.
I also draw your attention to the escalation of the conflict between the United States and China. Protests in Hong Kong reduce investor interest in this financial Hub which in turn contributes to the flow of capital to the United States, thereby supporting the US stock market.
Despite all this, the risk of the second phase of the crisis remains elevated, as indicated by the demand for gold, which is still trading above the psychological level of $1,700 per ounce.
And now we turn to the comments from the head of the ECB. She stated that the “soft” scenario of the ECB is now outdated. The economic downturn is now seen somewhere between the “medium” and the “serious” scenario. The point is that, according to the latest results for this year, the economy of the currency block will shrink from 8 to 12% but even so the market reacted very calmly to this statement. The Euro currency pairs trading volatility remained within the average indicators, indicating that traders understand this and have taken this into account.
Also, Christina Lagarde said that after the pandemic there will be no new debt crisis, thereby providing moderate support for EUR.
I will complete today’s review with the “black gold” market. The price of American grade WTI returned to the technical resistance level at $34.5 per barrel. Further growth will require a strong bullish fundamental factor. Therefore, there is a risk of a moderate decline in oil prices.
The above review is not a direct guide to trading, and can only be classed as a recommendation.
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