European stock markets opened marginally higher on Wednesday as optimism about Pfizer and BioNTech’s COVID-19 vaccine continues to dominate the markets, overshadowing concerns over rising cases. Of Note, France and Italy both recorded the highest daily coronavirus death tolls since April while in Germany, the number of Covid-19 patients in intensive care has reached a new record. Meanwhile, U.S. top infectious disease expert Anthony Fauci said that a Pfizer coronavirus vaccine could be distributed as early as December while low-risk people in the country should get access to a vaccine by April.
Against this backdrop, the UK FTSE 100 index rises 0.44% to 6,324, Italy’s FTSE MIB gains 0.35 percent to 20,924, France’s CAC 40 edges higher by 0.23 percent to 5,431, while the German DAX 30 adds 0.32% to 13,204. Meanwhile, US stock index futures are modestly higher, with trading could be quiet with the US observing a partial holiday.
In currencies, the dollar is mixed on Wednesday, trying to decide on further direction amid a lack of fresh news and economic data. EURUSD was once again rejected from the levels above the 1.18 handle, trading marginally lower on the day but still holding above the 20-DMA that acts as the key immediate support. Later today, the ECB’s Lagarde comments could affect short-term dynamics in the pair if the central bank governor mentions the economy and monetary policy.
Meanwhile, NZDUSD jumped to March 2019 highs during the Asian hours after the Reserve Bank of New Zealand left the current stance of its monetary policy unchanged and hinted at its unwillingness to proceed to negative interest rates. Against this backdrop, the New Zealand dollar extended the rally to the 0.69 handle and stayed elevated during the European hours. If the pair manages to turn this figure into support, the 0.70 key barrier will come back into market focus. However, it looks like the prices could see a downside correction from the current levels due to overbought conditions.
In the oil market, Brent crude climbed to early-September highs marginally below the $45 level on Wednesday, extending the recovery from the lows below $37 seen at the start of this month. Despite the initial signs of overbought conditions, it looks like the futures are ready to extend the rally if the EIA data due on Thursday confirm further contraction in the US crude oil inventories. Overnight, the API data showed that crude oil stockpiles declined by more than 5 million barrels last week. In a wider picture, the oil market derives support from the lingering vaccine hopes. In case of a bearish correction, the initial support is expected at $43.60.
Nathan Lambert, Head of Global FX Analytical Department