Gold Dumped Whilst Equities Soar on Vaccine Breakthrough | - International

  • Drug maker Pfizer claimed that their COVID-19 vaccine was over 90% effective during a large-scale test. Pfizer’s stock (PFE) gapped up over 15% from Friday’s close, settling the session up by nearly 9%.
  • The DJIA (US30) and S&P 500 (US500) broke to new record highs following a Biden win and vaccine breakthrough. Yet the technology sector suffered as “stay at home” companies like Netflix (NFLX), Amazon (AMZN) and Zoom (ZMO) dragged the Nasdaq 100 (USTEC) lower.
  • Safe havens were sold-off aggressively on the back of the news, with gold trading -5.8% at one point during its most bearish session since in 3-months. USD/JPY rallied 2% during its most bullish session since March.
  • On Trade, the European unveiled plans to slap up to $4 billion of tariffs on US imports. The timing is interesting as it gives them leverage over Joe Biden before he sets foot in the White House.
  • In yesterday’s Tankan report, Japanese businesses were revealed to be less pessimistic with respondents saying conditions were good than bad. At -13, the manufacturing index is its least pessimistic level since February whilst the service index was its least pessimistic since March.


Today’s Calendar Events (Time are GMT+10 Sydney)

  • No major economic data is scheduled for today.
  • Although AUD, NZD and CNH will be sensitive to China’s PPI and CPI release.


Nasdaq 100 (USTEC): Money to Flow Out of the Technology Sector?

  • If we are indeed on the road to a widely available vaccine, it could see money flow of the technology sector in anticipation of an end of lockdowns.
  • The fact the Nasdaq 100 (USTEC) printed a bearish outside day whilst the S&P 500 and DJI broke aggressively to new highs suggests this has already started.
  • With its failure to break to new highs, the bias remains bearish below 12,480 – and a break beneath Thursday’s low brings the low around 11,000 into focus.


NZD/JPY: Potential to Break a Multi-Month range

  • Positive sentiment provides a tailwind for risker pairs such as NZD/JPY and AUD/JPY. Given NZD/CHF also broke firmly above a long-term bearish trendline yesterday and AUD/NZD trades lower, NZD is clearly stronger than AUD at present.
  • A break above 0.7200 breaks it out of a 3-month range and brings the 73.55 high into focus.
  • Due to the elongated candle, traders could seek bullish setups on intraday timeframes if prices retrace within yesterday’s large range (eg. Look for support around the Marabuzo line or 71.20 support level)


GBP/AUD: Bullish Pinbar Warns of Counter-Trend Move

  • Prices have paused around out 7970 / 1.8000 target, although yesterday’s pinbar warns of the potential to bounce higher.
  • A break Above 1.8140 suggests the countertrend move is underway.
  • Further out, the bias remains bearish overall so bears could wait for evidence of a higher low to form as part of a potential swing trade.


Watchlist Update:

AUD/USD: 0.7340 target reached. Removed from watchlist given the 2-bar bearish reversal on the four-hour chart.

ASX 200 (AUS200): 6500 target reached at what was a blink of an eye. We are awaiting a period of consolidation before reconsidering considering bullish setups.

NZD/CHF: Strong break of the bearish tendline on the weekly chart. We are awaiting a period of consolidation before considering bullish setups.

USD/CHF: Strong rally from 0.9000. We will have a bullish bias with a break above 0.9200.

Gold (XAU/USD): Removed from watchlist, given yesterday’s strong bearish session.  

Silver (XAG/USD): Removed from watchlist, given yesterday’s strong bearish session.  

Ethereum (ETHUSD): Bias remains bullish above 425 (Monthly R1) with 480 highs now in focus.

Bitcoin (BTCUSD): The bullish flag has been invalidated, although new support is now 14,800. We’ll step aside for now and re-evaluate as the week progresses.


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