Weaker Risk-on Sentiment
Global stock markets retreated further on Wednesday on markets fear from the likely shut down in the US as COVID-19 cases continue its upward trend. Investors ignored Pfizer update about even 95% success rate of the coronavirus vaccine’s trials and cut back some of their long positions on major US indices.
Markets know that Pfizer’s and Moderna’s vaccines need time to get the necessary approval from health regulators and there are some logistical issues when it comes to distributing the vaccine. Putting that aside, even with rolling out the vaccine restriction measures will continue until a decent level of immunity of the virus is available.
Based on the above and the lack of a new fiscal stimulus package and the unlikelihood of passing it in Congress until after the new administration takes over the market closed in the red yesterday.
|
Change % | |
|
-1.3 % | |
|
-1.2% | |
|
-0.8% | |
|
-0.9% | |
|
-0.3% | |
|
-0.6% | |
|
-0.4% |
EUR/USD and Main FX Markets
The greenback reversed higher on weaker risk-on sentiment in the market. That said, the US Dollar index outlook remains neutral while above September 1 low at 91.72.
The EUR/USD failed to rally above 1.1909 then pointed lower eyeing a test of the low end of the current trading zone 1.1620 – 1.1909.
The GBP/USD rebounded around 1.3300 and fell for a test of 1.3184. A close below that level could change the pair’s outlook to neutral.
Gold and Oil
The oil traders are considering the surging coronavirus cases that may force more countries to shut down some parts of their economies and consequently reduce oil demand but also take into account the possibility of OPEC+ to extend output cuts in the Q1 of 2021 to maintain price stability. Therefore, the Brent Crude failed on multiple occasions to overtake $44.50 indicating that the upward trend is losing momentum.
The Gold has tested today the $1,861 then rallied, a close below that level will change the precious metal outlook to negative and may encourage bears to press towards $1,796/oz.
Looking Ahead
Investors will follow the US jobless claims numbers with the Fed Mester’s speech at 2:30 PM (GMT) then the US home sales numbers at 4:00 PM and Fed Mester’s speech at 6:35 PM.