Dependence on the COVID-19 vaccine

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Financial and commodity markets analytics

Market Watch review. 16.11.2020

In today's release, we’ll cover the following topics:

  • European and American stock indices resumed growth. 
  • Bitcoin holds above $16,000. 
  • WTI crude oil is trading below $41.5. 
  • Vaccine dependence. 

The current week started with optimism in the stock markets. So the main European and American stock indices show steady growth, thereby indicating an increase in interest in risky assets. As a result, USD is losing ground across the entire market spectrum, and risk currencies such as AUD and NZD have resumed growth.

I would like to draw your attention to the NZD/USD currency pair, the quotes of which came close to the psychological and at the same time strong technical level of 0.6900, since this is the maximum since the beginning of 2019. Moreover, this level kept buyers for five months. As a result, a breakout and subsequent fixation of quotes above it can provoke a strong wave of growth. However, active purchases under this level are not advisable.

Now let's move on to the cryptocurrency market. After a moderate decline in BTC over the weekend, buying activity has increased markedly, thereby allowing the price to return above 16,000. However, the previous maximum has not been updated yet, so it is extremely difficult to exclude the risk of a deeper corrective decline. The first target for buyers is 16800 - the maximum since the end of December 2017.

Shifting to the US trading session, I note moderate optimism in the oil market, which is also due to the general euphoria about the unexpectedly good results of the vaccine trial in the third phase. But before the opening of markets in the United States, demand for US WTI oil remained moderate and even insufficient to overcome the resistance at $41.5 per barrel. Therefore, we should not exclude the risk of a collapse in oil prices below $40.

With all that said, we see an incredibly high dependence on the vaccine. Any statement, both positive and negative, has an incredibly powerful impact on the markets. Serial production of the vaccine and fairly rapid vaccination in the United States and a number of European countries can provide significant support to stock indices and risky currencies, thereby significantly weakening the USD.

Closely monitor the news background and be prepared for all the surprises of the market.

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