Coronavirus Worries Return, EUR/USD & Gold Remain Stable

Coronavirus Worries Return, EUR/USD & Gold Remain Stable

The coronavirus weighs again on the US economic growth, and why we should rethink Pfizer’s vaccine.

Pfizer’s Vaccine, what is the Catch?

At the start of this week, markets cheered Pfizer’s announcement of the promising coronavirus vaccine. However, bulls pulled back later after reconsidering the vaccine’s distribution process with the need for a costly freezing system that will inflate the vaccine’s cost. Additionally, the vaccine should be injected within five days otherwise it becomes useless.

Tech Equities Rebound

Tech companies rallied on Wednesday on the back of the vaccine’s logistics reality combined with the coronavirus resurgence in the US. Investors refuged to the safety of the tech stocks as odds of a new lockdown have increased and demand on cyclical stocks slowed down.

In New York, curfews were imposed on gyms and restaurants with limits on gatherings sparking fears of more economic losses if tougher measures were imposed to contain the virus.

Stock Market

Change %

S&P 500

+0.8%

Dow Jones

-0.01%

NASDQ

+2.5%

Japan 225

+1.0%

DAX 30

+0.6%

FTSI 100

+1.4%

CAC 40

+0.5%

EUR/USD and Main FX Markets

The 10 years treasury yield slipped on Thursday by near 5.0% as the market sentiment weakened due to expectations of a lower US growth in Q4 depending on the severity of health restrictions states might take. That said, the US Dollar index remained steady above 92.50 a break above the 50-day SMA could send the price for a test of 94.04.

The Euro edged lower on Wednesday as ECB sources kept the door open of using any tool in December’s meeting including cutting the interest rates. Of course, the market expects to increase the emergency package in terms of quantity and duration as cutting rates may not be that effective. Therefore, the EUR/USD is likely to continue its sideways move and may fall for a test of 1.1620.

The GBP/USD retreated on Thursday on lower than expected GDP (QoQ) of 15.5. The UK economy may contract in November between 6 to 7% due to the newly imposed lockdown and this will affect the overall GDP (Q4). On the other hand, Cable slipped on Wednesday by 0.2% on reports of the EU-UK trade deal that could miss the November 15 deadline. The pair could rally to re-test 1.3300, a close above this level could send the price even further towards 1.3459.

Gold and Oil

The oil price spiked on Wednesday to a near two and a half months high at $45.27 on hopes that OPEC+ would extend productions cut beyond January 2021. This led the Brent Crude to rise more than 12% and retreat after as some bulls seemed to cut back. A close below $43.60 could send the price towards 41.70.

The Gold tested on Wednesday the low end of the current trading zone $1,861 - $1,921 then closed above hinting towards the high end of the zone at $1,921.

Looking Ahead

On the economic calendar, EUR/USD traders will follow the Eurozone industrial production number of September at 2:00 PM (UAE time), the US inflation rates of October with jobless claims at 5:30 PM, and changes in the US oil stockpiles at 8:00 PM. Later on, the ECB president Lagarde will deliver a speech at 8:45 PM then-Fed members Evans and Williams will speak at 10:00 PM and 11:00 PM respectively.

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