Risk appetite is starting to surge as markets jump at the slightest glimmers of hope. News that the US biomedical firm Moderna has created an immune-system response to fend off Covid-19 from its experimental vaccine was met with ‘absolute glee' by the markets and FX. Moderna CEO's quote of "this is a very good sign that we make an antibody that can stop the virus from replicating" sent Moderna's share price to the moon.
However, the results are from a tiny first stage trial and was done with volunteers rather than random sampling, therefore it couldn't have sampling effects and have the result skewed. The company is moving ahead with plans for larger testing, but this didn't stop critics from pointing out that the results could be outliers and that it may not actually see an immune response to actually fend off the disease.
The market fluctuations from both pieces of news were plain to see; WTI light crude hit a 2-month high and is now up over 130% since April 22 as the optimism surrounding the Moderna COVID drug trials spilt into global risk sentiment and oil demand starts to return. This risk sentiment has also spread into FX with USD, JPY and CHF getting shed and did not bounce back when critics hit out at the study. In fact, in the G10, JPY and USD are now the bottom 2 performing currencies this week.
Currency Moves
EUR/USD finally broke through $1.09 and will be looking to test the top of the April peak of around $1.10 if risk sentiment remains.
GBP/USD had been battling for which was the weaker partner in the pair but with GBP's risk profile, it lost this battle and saw Cable adding over 0.6% to $1.22. The caveat here is the Bank of England which, getting ever closer to negative rates, will likely see Cable at $1.20 rather than $1.24 if all things remain the same.
Then there are the commodity currencies AUD, NZD and CAD.
CAD has been surging over the past week as oil continues to recover. NZD/USD is back above $0.60 and looking to test $0.61.
The AUD/USD made a 7-week high on the risk sentiment but also on the surge in iron ore which breached US$100 a tonne for the first time in years. AUD/USD touched $0.658 before easing on questions around Moderna. But at $0.6555, it shows the risk is on.
This information has been prepared by Mitrade. In addition to the disclaimer below, Mitrade does not represent that the information provided here is accurate, current or complete, and therefore should not be relied upon as such. This information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Mitrade is not a financial advisor and all services are provided on an execution only basis. We advise any readers of this content to seek their own advice. Reproduction or redistribution of this information is not permitted.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.