Christmas rally kicks off. Where’s vaccine?

Trading 28 Nov 2020 Commentaire »

Hi dear colleagues!

Markets are still rejoicing Joe Biden's victory in the US presidential election. Besides, investors are in the elevated mood amid the rumors that Janet Yellen could be appointed new Treasury Secretary. Global stock indices are extending a rally on the back of the news of successful trials of vaccines for COVID-19. At present, volatility is at the lowest levels since August 2020. Even the Russian ruble is making efforts to conquer the levels below 76 against the US dollar, though such efforts have been in vain.

Meanwhile, infection rates are measured at 600,000 new cases worldwide. Despite such a dismal picture, the market clings to the hope for new fiscal stimulus from the US Fed and mass vaccination in the near future. Stimulus measures do not raise questions among investors. When it comes to a vaccine, it raises doubts.

The uptrend in the US stocks alongside the expected measures of monetary easing pushed the US dollar to the lowest mark in two years against a basket of its rival currencies. Analysts foresee prospects of its further decline (picture 1).

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Picture 1. Dynamic of USDX futures

Indeed, from the technical viewpoint, the US currency is set to continue its decline. However, the US dollar is a complicated and unpredictable currency so that it could easily enter a trading range. Besides, the ongoing breakout downwards could prove to be fake. Anyway, I wouldn't exclude such a scenario, even though the US dollar index could close November at a level below 92. Another thing, EUR/USD follows an inverse dynamic to the US dollar. So, let's look into the euro and its involvement in the US dollar's dynamic (picture 2).

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Picture 2. EUR/USD

One trading day is left before the month is over. No one dares to affirm that prospects of the euro and the dollar are transparent. In terms of technical analysis, EUR/USD is now trading below powerful resistance of 1.20. It will be hard for the pair to climb above it. In other words, meanwhile the euro is following the uptrend, but it is still unclear whether the euro will be able to extend the uptrend. Indeed, the rally of stocks looks shaky because the COVID-19 pandemic overshadows market optimism.

The market is encouraged by the election of Joe Biden as next US President, the soonest approval of the long-awaited stimulus bill, and reports on successful trials of vaccines for the coronavirus. The Russian vaccine was neglected by the Western mass media. The vaccine by Pfizer came under the spotlight of media attention. Personally, I have some questions which I would like to highlight. Interestingly, CFDs on Pfizer stock are traded under the #PFE symbol on the trading platform with InstaForex.

Well, what information is available nowadays? Pfizer requested urgent registration with the US healthcare watchdog. The market is aware of successful human trials, so Pfizer is ready to launch its facilities immediately, producing millions of jabs. However, some experts take this with a pinch of salt. Pfizer's market capitalization amounts to $203 billion. Its sales are projected at $52 billion. The company stated that it is capable of producing hundreds millions of dozes worth $27 apiece. This should boost the company's sales by billions of dollars. Do you know what the problem is? Oddly enough, analysts reckon that the vaccine production and supplies will make no difference to its sales and profits (picture 3).

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Picture 3. Pfizer actual and projected financial records

Remarkably, the company has got a market worth $30 billion at its disposal but it will make a zero impact on its revenue. Strange enough, isn't it? Another thing. Canadian media reported that mass vaccination in Alaska would be launched not until April/May 2021. Meanwhile, this state relied on a trial batch of the vaccine that will be available in mid-December. A volume of this batch is uncertain. It could be 5,000 or 10,000 or 20,000 jabs. The state government has already distributed them among risk-exposed groups.

Another strange event has happened. Pfizer CEO sold his stock when its market quotes hit a peak over $40 apiece. Why did he decide to sell shares as soon as the company had announced a fire-sure drug against the coronavirus? Analysts share opposite viewpoints on Pfizer. Despite the fact that the company is running an efficient business, there are low expectations of its prospects. The company is not among those ones with the highest revenue prospects. Besides, experts point out that the company is heavily in debt and has limited space for investment. Its reports on earnings often come in worse than expected.

It goes without saying that the vaccine production at a rate of millions of dozes requires huge money which the company does not have. What I mean to say is that the company is not able to produce the vaccine on a nationwide scale and arrange a smooth logistics.

I don't mean to waste your time with this story. I just want to tell you that there is a long way from announcements and actual mass vaccination. Before a vaccine is made available nationwide, there are a lot of obstacles. Unless they are settled, mass vaccination is impossible. I suggest that you should mull over this situation. The market could revise their sentiment from euphoria triggered by the welcome vaccine news to the doom and gloom due to the failure of large-scale vaccination. In the meantime, rampant infection rates are the cause for grave concern. On the other hand, I don't want to drive you in despair because the market is likely to crash sooner or later. Besides, I don't urge you to bet against the market at the time of its stunning rally. Nowadays the market provides you with nice trading opportunities. What is important is to be cautious and follow the rules of money management.

The material has been provided by InstaForex Company - www.instaforex.com

Dollar Extends Weak Spell

Trading 28 Nov 2020 Commentaire »

The U.S. dollar was weak against most of its peers on Friday, as the currency's safe-haven appeal lost some sheen again amid continued improvement in risk sentiment thanks to optimism about coronavirus vaccines.

The likelihood of a fiscal stimulus in the U.S. and recent weak economic data also weighed on dollar.

The dollar index slid to 91.76, giving up nearly 0.25% from previous close.

Against the Euro, the dollar weakened to $1.1964, going down by over 0.4%.

The Pound Sterling was weaker against the greenback, fetching $1.3301 per unit, after closing the previous session at $1.3358. Uncertainty about a Brexit deal was among the key factors that contributed to the British currency's weakness.

The Yen firmed up to 104.46 a dollar, gaining from 104.26.

The Aussie was stronger by about 0.35% against the U.S. dollar, with the pair trading at 0.7387.

The Swiss Franc strengthened to 0.9047 from 0.9070 a dollar, while the Loonie was up at 1.2991 a dollar, firming up from C$1.3017.


The material has been provided by InstaForex Company - www.instaforex.com

Oil Futures Settle Modestly Lower For The Day, But Gain About 8% In Week

Trading 28 Nov 2020 Commentaire »

Crude oil futures settled lower for the session on Friday, but still managed to post a strong weekly gain.

Rising optimism about coronavirus vaccine raised hopes global energy demand will pick up significantly and lifted crude oil prices in recent sessions.

Expectations that OPEC and its allies will delay relaxing their output cuts contributed as well to oil's strong uptick this month.

Pfizer and Moderna came up with upbeat news about the Covid-19 vaccines being developed by them to be 94.5% and 95%, effective in preventing the virus infection.

AstraZeneca too reported encouraging results of their vaccine trials, but then some questions have been raised about the efficacy of the vaccine being developed by the company along with Oxfor University.

AstraZeneca's Pascal Soriot told Bloomberg the British pharmaceutical giant is likely to run a new global trial of the vaccine candidate

West Texas Intermediate Crude oil futures for January ended down $0.18 or about 0.4% at $45.53 a barrel. WTI crude oil futures gained about 8% in the week, posting gains for a fourth straight week.

Brent crude futures settled with a gain of $0.45 or 0.9% at $48.25 a barrel.

OPEC+ ministers are scheduled to meet on Monday. It is widely expected that the group will delay an output increase by three months. Informal talks will be held on Saturday prior to the meetings scheduled for next week.


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Treasuries Move Higher Amid Vaccine Uncertainty

Trading 28 Nov 2020 Commentaire »

With trading resuming following the Thanksgiving Day holiday, treasuries moved to the upside on Friday after ending Wednesday's trading nearly unchanged.

Bond prices moved steadily higher over the course of the shortened trading session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.6 basis points to 0.842 percent.

Treasuries may have benefitted from uncertainty about a coronavirus vaccine, as some questions have been raised about the efficacy of the vaccine being developed by Oxford University and AstraZeneca.

Some experts have said the concerns could affect the chances of the vaccine getting speedy U.S. and EU regulatory approval.

AstraZeneca Pascal Soriot told Bloomberg the British pharmaceutical giant is likely to run a new global trial of the vaccine candidate.

Nonetheless, overall trading activity was subdued, as many traders remained away from their desks following the holiday.

A lack of major U.S. economic data also kept traders on the sidelines ahead of the monthly jobs report due next week along with reports on manufacturing and service sector activity.


The material has been provided by InstaForex Company - www.instaforex.com

Gold Futures Settle Sharply Lower

Trading 28 Nov 2020 Commentaire »

Gold prices declined sharply on Friday with improved risk sentiment reducing the commodity's safe-haven appeal.

Optimism about coronavirus vaccines and news about Joe Biden's transition to the White House lifted sentiment and drove up stock prices in recent sessions, prompting investors to move away a bit from the safe-haven asset.

A weak dollar limited gold's slide. The dollar index, which drifted down to a low of 91.76, was last seen at 91.82, down 0.19% from previous close.

The most active Gold futures for February contract ended down $23.10 or about 1.3% at $1,788.10 an ounce today. Gold futures shed about 4.5% in the week, the sharpest weekly decline in two months.

Silver futures for March ended lower by $0.807 at $22.639 an ounce, while Copper futures for March settled at $3.4175 per pound, gaining $0.0870.

AstraZeneca Plc and the University of Oxford are facing questions about their Covid-19 vaccine trial results after acknowledging a manufacturing error.

The U.K. drug maker said that further research is needed but it didn't expect the additional trial to delay U.K. and European regulatory approvals.

The British government said it has asked the regulator to assess the Oxford/AstraZeneca vaccine to understand the data and determine whether it meets rigorous safety standards.


The material has been provided by InstaForex Company - www.instaforex.com