The rally in the stock markets continues. It seems that investors got tired of the negative over the past week and began to buy cheaper shares taking advantage of the news about the approval of a new Pfizer-BioNTech vaccine against COVID-19.
This wave of optimistic mood naturally supported the demand for commodity and commodity assets, which led to a strong surge in crude oil prices. And in this situation, the dollar, yen, and franc as safe-haven currencies came under strong pressure.
Is it really the news about the vaccine being the only strong positive factor?
Yesterday, it was mentioned that the market reversal in the mood of investors can be explained by the expectation that the change in the Fed's monetary rate will be extremely restrained and smooth, in order not to cause panic in the market. We do not think that only the news about the next vaccine has become decisive. Moreover, we draw attention to the fact that the data on business activity indices in both the manufacturing and services sectors of a number of countries in Europe and in America, turned out to be worse than expected, but they also failed to collapse the market. This indicates that investors are now focused on the topic of the impact of coronavirus on the global economy and the prospects for a new monetary policy of the Fed.
The new vaccine from Pfizer-BioNTech raises hopes that it will still be possible to defeat the COVID-19 infection in the future. At the same time, the "softened" version of the Fed's change in course will help soften the blow from the monetary reversal of the regulator.
From the economic data, the interim figures of German GDP were released today, which showed a quarterly growth of 1.6% against -1.8% and an increase year-on-year to 9.8% against a fall of 3.4% a year earlier.
We should also focus our attention on the publication of data on new home sales in the US later. Their growth is expected, which may also support the US stock market, and then in the world.
Considering the current situation on the markets, we believe that maintaining the current sentiment will lead to a rally in the stock markets, an increase in prices for commodity assets, and a weakening of the US dollar.
Forecast of the day:
The AUD/USD pair rose above the level of 0.7225, which may lead to further growth to 0.7320.
The USD/CAD pair continues to strongly decline amid a positive market mood, strengthening oil prices, and a general weakening in demand for the US dollar. The price dropped below the level of 1.2635, which may stimulate its further decline to 1.2525.
