Market Analysis

The euro reached a two-month high

FOREX

The euro reached a two-month high versus the dollar during the early part of Wednesday’s trading. The single currency’s gains result mainly from dollar weakness, as a cocktail of good news has lifted the mood of investors. Over the last few years we have all got used to the greenback’s safe-haven role, rising with anxiety and dropping whenever risk appetite returns. Well, it appears as though there may be brighter times ahead, as the market celebrates hopes of a COVID-free future and the end of Trump’s protectionism, so more dollar weakness is to be expected.

Ricardo Evangelista – Senior Analyst, ActivTrades


OIL 

There are two main drivers behind the oil price rally of the last few weeks. The first and main one is the positive vaccine developments. The second one is related to OPEC and OPEC+ meetings, as investors are expecting an extension of the current cuts, which seems already priced in by the markets.

Is there too much enthusiasm about the vaccine? We don’t know this yet. We should anyway remember that we are not talking about a single vaccine, as there are now many big pharma companies that have recently announced that they have effective solutions against Covid-19. In other words, markets are pricing this not as a sporadic attempt to mitigate the virus, but as a well-structured plan which should be able to seriously mitigate the number of people affected by this virus and put an end to the long series of lockdowns seen in the last few months.

From a technical point of view, WTI climbed above the previous top of August, reaching a new post-Covid high just above $45. The main trend remains bullish, while stocks of oil sector are recovering some of the ground lost in the previous months.

Carlo Alberto De Casa – Chief analyst, ActivTrades

 

EUROPEAN SHARES 
Stock markets had a mixed opening in Europe, with investors taking profits following new peaks reached yesterday on most benchmarks. Trading enthusiasm remains boosted by the removal of political uncertainty in the US and a reassuring economic outlook but investors preferred to temper their exposure to riskier assets ahead of a busy day of macro news. Today’s bearish correction could be qualified as “technical” and “normal”, like a usual pull-back after most markets broke-out of major resistances yesterday. However, most investors now brace for a host of significant US economic indicators such as Core Durable Goods Orders, Initial Jobless claims, Q3 GDP and the highly anticipated FOMC minutes which could bring a few surprises. In addition, oil markets and oil-related companies (airlines, miners and cruisers) may also see higher volatility later in the afternoon with the Crude Oil Inventories data. There is a high chance market directionality won’t be clear until investors have fully digested today’s latest slew of macro indicators.

Pierre Veyret– Technical analyst, ActivTrades

 

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