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EUR/USD Rallies as the Market Risk-on Goes on

EUR/USD Rallies as the Market Risk-on Goes on

Cautious optimism pushes major US indices to an all-time high. What moves markets today?

Now it is Moderna’s

Markets have remained upbeat on optimism caused by Moderna’s coronavirus vaccine. The pharmaceutical company claimed an over 94% of effectiveness of its vaccine and therefore, cyclical stocks rallied and pushed higher the Dow Jones to an all-time high at 29950 based on better economic expectations in 2021.

However, there still concerns about distribution’s logistics as Moderna’s and Pfizer’s vaccines as they need to be stored in extremely low temperatures and used quickly otherwise will become useless. Therefore, it's unlikely to recover pre-pandemic growth levels in Q1 2021 however, we could see a gradual improvement.

Stock Market

Change %

S&P 500

+1.1%

Dow Jones

+1.6%

NASDQ

+0.9%

Japan 225

+1.9%

DAX 30

+0.1%

FTSE 100

+1.3%

CAC 40

+1.2%

EUR/USD and Main FX Markets

The greenback edged lower on Tuesday on a stronger risk-on sentiment and on expectations that the Fed could increase its asset purchase program. The US Dollar index may fall towards 91.72 and a daily close below that level will change the market outlook from neutral to negative.

The EUR/USD remained above the 50-day SMA and pointed higher eyeing a test of 1.1909. A daily close above that level will change the pair's outlook to positive.

The GBP/USD benefits from optimism of a possible EU-UK free trade deal and continues trading above 1.3185, a close below this level will change the market outlook to neutral.

Gold and Oil

The oil price benefited from the coronavirus vaccines’ announcement and from a possible extension of the production cut from OPEC+ to be announced at end of November’s meeting. The extension could for 3 months to offset the increase of supply from the Libyan oil and a lower demand driven by the recent lockdowns in Europe and the increasing US infection numbers. The Brent Crude could rally towards 46.50 while above 43.70.

The Gold steadied above $1,861 and eyes a test of the 50-day SMA and a daily close above it could send the price for a test of $1,921/oz.

Looking Ahead

Not much today on the economic calendar, EUR/USD traders will tune in the ECB deputy president Guindos speech at 2:00 PM (GMT) and the US retail sales numbers of October at 2:30. Later on, investors will follow the bank of England governor bailey’s speaks at 3:00 PM with the US industrial production of October, the ECB president Lagarde speaks at 5:00 PM then Fed members Bostic, Daly, Williams speak at 7:00, 7:25, and 8:00 respectively.

This information/research prepared by Mahmoud Alkudsi does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk. The research provided does not constitute the views of JME Financial Services (Pty)Ltd nor is it an invitation to invest with JME Financial Services (Pty)Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of the date the report is published, the research analyst and his/her spouse and/or relatives who are financially dependent on the research analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities). The research analyst in not employed by JME Financial Services (Pty)Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation or particular financial needs before making a commitment to invest. The laws of the Republic of South Africa shall govern any claim relating to or arising from the contents of the information/ research provided.