Markets In Risk-On Mode, Hope For Corona Cure

US ISM Non-Manufacturing Next

The US dollar remains well bid on Wednesday with the index trading at 97.91 last, still above the bearish trend line for now. Monday’s stronger-than-expected manufacturing reading has offered support across the week, Traders now wait on the ISM non-manufacturing reading later today.

Euro under Pressure

EURUSD has been under heavy selling pressure again today as the ongoing rally in USD keeps the single currency weighted to the downside. ECB’s Lagarde speaks later today, and traders will be keen to hear her first comments since the ECB launched its year-long strategy review last month. EURUSD trades 1.1022 last.

GBP Bounce Continues

GBPUSD has been higher today with price continuing to extend gains off the 1.2978 level tested earlier in the week. The January final services PMI reading this morning was revised higher to 53.9 from 52.9, keeping GBP well bid.

SPX500 Trading Back to Highs

Risk assets continue to recover into the middle of the week with the SPX500 rallying back up to 3239.88 last, just shy of all-time highs. Sky News reported that Chinese researchers have made a significant breakthrough with regards to finding a vaccine for coronavirus, boosting hopes that health authorities will be able to soon contain the virus.

JPY & Gold Lower

Safe havens have been firmly lower today in light of the ongoing rally in equities, with both gold and JPY lower against the Dollar. XAUUSD has broken back beneath the 1554.69 level as the rejections from the 1608.54 level continues. USDJPY is testing the 109.71 level, following a sharp recovery off the bullish trend line around low 108s at the start of the week.

Crude Rallies on Risk Recovery

Oil prices have been higher today, benefiting from the broad improvement in risk appetite on hopes of a vaccine for the coronavirus. Yesterday, the API reported a larger-than-expected inventories build of 4 million barrels. Traders are now waiting on the headline EIA report today. Though, in light of the risk-on tone to trading, the report might lose impact. Crude trades back above the 50.65 level today at 50.95 last.

Loonie Stalls at Resistance

USDCAD price action is showing signs of a potential reversal now with two daily inside bars/pin bars at the 1.33 resistance/bearish trend line. If crude continues to recover, we could see a correction down to the 1.3207 level next. Canadian trade balance data later today could fuel further volatility in the pair.

Aussie Recovery Gathering Pace

AUDUSD has continued to recover across the week with price posting a further rally today. Price is now trading back up to the .67 level following a test of the .6671 support. The RBA kept rates on hold earlier in the week, offering support that has been furthered by the improvement in risk appetite into the middle of the week.