Moderna vaccine hype vapourised, causing the market to suffer from vaccine woes cues, leading the rally’s implications.
Summary: US Wall Street suffered a significant blow yesterday owing to reports from major healthcare sites stating that Moderna’s update on vaccine development for COVID-19 lacked substance hinting that the results published by the firm may not amount to much in reality. This caused the gains led by an update in the firm’s stock to deflate while also causing a massive wave of global risk indices and assets meltdown.
Asian market saw mixed activity given the fact that risk sentiment is already affected by China-U.S. tensions. European market saw major indices edged lower in early trading session over dovish cues from Moderna hype. However, major indices still managed to retain positive bias by mid-to-late European session with support from previous session’s Berlin-Paris backed 500 Billion Euro recovery fund and gains in major French food manufacturer and Swedish video game maker shares.
Precious Metals: Both gold and silver are trading positive with fundamentals hinting at a scenario where the short term outlook looks promising for rare metals. Sino-U.S. tensions, covid-19 vaccine hype woes and worries of covid-19 outbreak resurfacing amid relaxing lockdown measures keep safe-haven demand fundamentally supported in the immediate and foreseeable future.
Crude Oil: Crude oil price is seeing positive price action in both major benchmark indices. WTI futures trading in the international market is above $11 p/b while Brent futures are trading above $34 p/b supported by a decline in US weekly stockpile data released by API and OPEC supply cutback measures.
DXY: The US Dollar index continues to decline slowly and is fluctuating in the lower range of the 99 handle as broad-based risk sentiment remains relatively well supported despite ups and downs caused by vaccine hypes. As major economies are reopening their economy post lockdown hopes of economic rebalancing keeps risk sentiment well supported pressuring USD’s strength in the international market.
On The Lookout: Senate testimony meeting, which saw Powell and Mnuchin participate, made it clear that government support for covid-19 woes and recovery efforts will be bottomless despite the fact that the government is very likely to suffer serious losses. This greatly helped improve expectations for economic recovery in the USA, providing local investor risk sentiment with clear fundamental support.
The UK Government sold its bonds at the negative interest rate for the first time in history, cementing the speculation of another rate cut by BOE in the market. The government sold three-year bonds at an average yield of -0.003% ahead of a speech by BOE Governor Bailey, who is expected to confirm the central banks’ intention to push key rates to zero or below in upcoming policy meetings.
On the release front, the Canadian calendar sees the release of Core CPI, Wholesale sales data, and US EIA crude oil inventories data. There is also a release of FOMC meeting minutes later in the day. On the earnings front, Wall Street is set to see financial data from Target and Lowe’s.
Trading Perspective: US Wall Street is set to open flat amid mixed cues from the international market. But major indices are unlikely to see loss given positive activity of US futures in the international market supported by hopes for a recovery in the US economy.
EUR/USD: The pair continues to trade positive and is slowly edging its way up to 1.10 handle supported by increasing fundamental support from EU recovery fund updates. Broad-based USD weakness also adds strength to Euro bulls. Traders now await US data for short term profit opportunities.
GBP/USD: The pair is trading well in the red zone as a move by the UK government to sell bonds in negative interest rates ahead of official announcement from BOE weighed down sterling considerably. But USD’s weakness in the international market helped cap declines and kept price steady above 1.22 handle. Traders now await US data for short term profit opportunities.
USD/CAD: The pair is trading with clear dovish bias, having tested an intra-day low of 1.3866 pressured by USD’s weakness and firm CAD underpinned by positive crude oil price in the global market. Traders now await the US and Canadian macro data and Fed meeting minutes for short term profit opportunity.
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