Market Watch. Interest in risk has increased

Financial and commodity markets analytics

Market Watch review. 14.12.2020

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

  • Interest in risk has increased. 
  • AUD continues to strengthen. 
  • Britain and the EU are still negotiating. 
  • Vaccination in the United States. 

With the opening of the European trading session, the demand for risk continues to increase, due to two very strong fundamental factors. First, negotiations between the EU and Britain are continuing, which is already good for the whole of Europe. Secondly, the vaccination against COVID-19 is starting in the United States today. All this significantly increases the likelihood of a global economic recovery, thereby contributing to the strengthening of risky assets and currencies. 

I would like to draw your attention to the AUD/USD currency pair, which updated the highs of the current year in the first half of the European trading session. Despite the fact that demand above the technical resistance level of 0.7565 remained moderate, the bullish scenario will be in priority until the next return of quotes to the level of 0.7520. It takes into account the growth to 0.7650 – this is the local maximum since 2018.

And now back to the negotiations between the EU and Britain. There are no major changes, no consensus has been reached yet and nevertheless this trading week started with the growth of GBP, because the very fact of negotiations gives hope in the possibility to reach the agreement, which supports British currency and increases interest to the risk - I mentioned that before.

The above price chart of the GBP/USD currency pair clearly shows growth since the beginning of this week, but demand remains weak under the technical resistance level of 1.3400. To break through the marked resistance and further growth of the pair's quotes in the area of 1.3480-1.3510, it is necessary to get confirmation of the ability of Britain and the EU to reach a trade agreement within the framework of the global Brexit deal.

Shifting to the US trading session, I note a very low saturation of the news background. Nevertheless, I do not rule out an increase in trading activity with the US dollar, because today is the first day of vaccination in the United States, during which a lot of unexpected events can occur, including the provocative ones. Therefore, the current week may be volatile for the US currency.

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


Analyst

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