• Mike Paterson

Vaccine hopes sends risk sentiment soaring

Tuesday 10 November 2020

Yesterday's big news was the announcement by Pfizer/Biontech that a vaccine to combat COVID, reported to be 90% successful thus far, will be available sooner rather than later possibly even by the end of Nov/Dec.

Equity markets and oil price went through the roof giving risk-on sentiment trades a big boost too with safe haven currencies sold along with Gold. Lots of two-way FX business to be had since but we're currently seeing a surge in GBP despite Brexit casting its shadow still after the House of Lords voted against the IMB and removed a key section last night. This morning's UK jobs/wages report wasn't so brilliant either but markets are focussed elsewhere right now.

A vaccine is of course, in principle, extremely welcome news for all of us but it will take a long while to see the full impact on any economic recovery from this very low base but it seems like a case of going with the flow for the moment. If you're not sure, or you need to re-evaluate your strategy in the light of this key COVID development, then stay out until the dust settles.

GBPUSD has now posted new recent highs of 1.3250 after failing above 1.3200 yesterday and falling back to 1.3120 with a base forming at 1.3160 and the rally given a further lift by the 08.00 algo box this morning. EURGBP has finally broken back down through 0.9000 to test strong support at 0.8950 after holding 0.9050-60 once more yesterday and has given a boost to GBPUSD too as EURUSD struggles to rally after its retreat from 1.1900. NB EURGBP breaking down through 0.8950 and triggering stops to post 0.8920 as I type. GBPJPY rallied strongly from 136.20 on the Pfizer news with JPY selling lifting USDJPY rapidly too and now up through 139.00 as I type having found a new base at 138.20.

I stay poised to sell GBP rallies as my preferred side and buy back in the dips as ever but I have to respect the current demand. Patience continues to be a virtue and rally-selling in GBPUSD is still bringing some reward but entry level key as always. Definitely expecting dip demand still as I've said for a while now amid the current USD supply.Brexit remains in the room and the negative impact of COVID on the UK economy still in the mix.

USDJPY rocketed on the Pfizer news and took no prisoners with JPY selling leading the way and we've been up to 105.50 from 103.30.EURJPY on a similar tear higher yesterday but struggling a little since on some general EUR selling having held 124.00 after capping at 125.00.EURUSD capped at 1.1915 yesterday helped by those large expiries at 1.1900 which I warned about here and on Twitter. I hope the steer helped. We've been soggy since with a failure to get back above 1.1850 and now testing 1.1800 as I type.USDCHF also rallied sharply on the CHF supply and has now found a good base at 0.9100-20 as EURUSD caps again and with the SNB still ever watchful.

AUDUSD  rallied strongly helped by the AUDJPY demand but failed above 0.7330 before finding support at 0.7260-65 but capping at 0.7300 since.USDCAD collapsed down through 1.3000 as oil price ramped higher on the Pfizer news but found support into 1.2920 and since rallied to test 1.3020.

Markets are ever-fickle so don't forget to contact me if there's areas that you might need some further help with.

Let's continue to be careful out there in all things. Staying safe must be our main priority still.

Interbank rates:  08.40 GMT

GBPUSD   1.3210

EURUSD   1.1840

EURGBP   0.8967

GBPEUR   1.1157

GBPAUD   1.8127

GBPCAD   1.7190

GBPJPY   138.77

GBPZAR   20.5860

GBPHKD   10.2559

USDJPY   105.06

USDZAR   15.5517

EURJPY   124.35

EURCHF   1.0806

EURHKD   9.1923

AUDUSD   0.7284

USDCAD   1.3015

USDCHF   0.9128

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