WTI recovering to $14
Support for risk related currencies is dominating the FX narrative in the early part of Wednesday’s European session, with the euro the star performer in gaining almost 0.5% versus the dollar. The single currency’s resurgence is remarkable, considering that Italy had its credit rating downgraded by Fitch yesterday and now sits just one notch above junk. Optimism triggered by several countries entering a less stringent phase of their lockdowns and further enhanced by a recovery in oil prices is driving the resurgence of risk appetite in the markets, appearing to indicate that investors also feel positively towards the upcoming Fed and ECB announcements.
Ricardo Evangelista – Senior Analyst, ActivTrades
A risk on scenario has dominated markets in the last few days. Central banks’ huge easing decisions and growing expectations for a relatively quick solution to coronavirus – or at least for ending the lockdown – are giving some relief to oil with the June contract of WTI recovering to $14. The modest gains have been achieved despite ETFs rolling over their contracts well in advance of the actual expiry of the front-month contract order to avoid a similar situation to what happened last week when the May expiry turned negative in its final day.
Carlo Alberto De Casa – Chief analyst, ActivTrades
Shares mainly opened higher on Wednesday ahead of what is expected to be a very busy day for investors despite an uncertain mood following mixed earnings yesterday. Today’s market sentiment is likely to be shaken as traders struggle to find any fresh bullish drivers to the current rally amid a slew of major US economic data due this afternoon (Q1 GDP, Pending Home Sales and FOMC meeting). In addition to the macro environment, stock investors will also keep an eye on corporate results with big names like Airbus, Boeing, Facebook and Tesla all reporting today.
The FTSE-100 is the best performing European index so far with the price driven up by the real estate and communication & services sectors. The market continues to register fresh highs and is currently trading above 6,000pts having cleared a notable zone when it climbed above 5,895pts. The moving averages are showing an upside reversal while the RSI indicator returned to its buy zone, climbing above 50%. The next target is 6,235pts which will constitute a 50% retracement of the entire bearish move that began at the beginning of this year.
*The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication. All information has been prepared by ActivTrades PLC (“AT”). The information does not contain a record of AT’s prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk.