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ZFX: Risk appetite is still dominating amid uncertainties
On Monday, Asian stock markets are generally bullish cautiously, following a mixed trade last Friday in Wall Street. Investors are now digesting those positive news of vaccine, boosting the risk appetite of the financial market worldwide. The approval of Pfizer Inc and BioNTech’s Covid-19 vaccine in the US sparked optimism of a faster economic recovery.
For the FX market, the Sterling is the focus on Monday early session. The UK and the EU further extend the deadline for the trade deal negotiations, driving the Sterling gapping up in the opening, rising to 1.3360 level against the dollar. Analysts believed that both sides are willing and able to reach the deal through further talks. However, some analysts also warned that, both sides are just repeatedly mentioning about their own concerns rather than narrowing their differences, meaning that the risk of no-deal Brexit is still high.
The dollar index is trading around 90.7 level in Asian session, near its 2 1/2-year low. This week, investors will monitor further hints from the FOMC, and now expecting the further purchasing of longer-term US treasuries by the Fed.
Also, the expectations of economic recovery due to the positive coronavirus vaccine news and the hope of a new round of the US stimulus bill are lifting the bullish sentiment, hurting the safe haven dollar, but pushing up those riskier assets.
While the low-rate dollar is under pressure, gold prices have lost the momentum as the rollout of vaccines. The spot gold is now entering into a ranging around $1830-1840, waiting for the final decision of the US fiscal and monetary stimulus.
On the other hand, oil prices are doing good recently, have rallied for six consecutive weeks. Weak dollar, OPEC+ decision and the global recovery hopes all together boost up the oil prices these days. But, some analysts remind that the current oil priced may have already priced in all the bullish factors in the market.