Forex Analysis

Major Equities Ended Positively; New Vaccine Trials Spark Optimism

Equity Markets

The US sharemarket resumed from a public holiday on Monday with a bang of optimism but pared some gains in the final hours of trading following reports that the Trump Administration is considering a range of sanctions on Chinese officials.

Novavax Inc, a clinical-stage biotechnology company, has injected the coronavirus vaccine into 130 healthy volunteers in Australia in the first phase of trials. Global stocks edged higher on Tuesday fuelled by hopes of a potential vaccine.

World Equity Indices

Source: Bloomberg

Major US equity indices closed in positive territory but fell through their session highs dragged by tensions between the US and China:

  • Dow Jones Average Industrial gained 530 points or 2.2% to 24,995.
  • S&P 500 added 36 points or 1.2% to 2,992.
  • Nasdaq Composite rose by 16 points or 0.2% to 9,340.

Source: Bloomberg

Currency Markets

In the FX space, major currencies were stronger against the US dollar as risk sentiment improved over the trials of a vaccine by another company. Commodity-linked currencies were among the best performers against the greenback compared to the safe-haven currencies.

Source: Bloomberg Terminal

The Antipodeans surged on the back of the overall optimism in the markets, the vaccine news and a weaker US dollar. On the economic front, the kiwi gained upside momentum with a better-than-expected trade surplus of $1267 million in April. Both the AUDUSD and NZDUSD pairs rose to an 11-week high before consolidating around the 0.66 and 0.62 levels respectively.

AUDUSD and NZDUSD (Hourly Chart)

Source: GO MT4

The EURUSD moved higher, lifted by a series of positive developments despite the US-Sino tensions. However, the pair remained range bound just below the 1.10 level. Europe’s frugal four and the EU Recovery Plan are weighing on the shared currency. The immediate attention will be on the draft recovery plan by the European Commission which is scheduled to be unveiled on the 27th of May 2020.

EURUSD (Hourly Chart)

Source: GO MT4


With demand and supply fundamentals improving, the vaccine news and Russia’s willingness to further support the rebalancing of the market helped oil prices to rise higher. It appears that Russia is almost complying with the OPEC deal with its share of cuts.

As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) are currently trading at $33.93 and $36.17 respectively. Weekly oil reports will be eyed for fresh training impetus.


The risk-on environment has tamed the momentum of the yellow metal. However, caution still prevails given that geopolitical tensions are escalating. As of writing, the XAUUSD pair fell and consolidated around $1,712.

XAUUSD (Weekly Chart)

Source: GO MT4

Key Upcoming Events

  • EU Financial Stability Review (Eurozone)
  • ZEW Survey – Expectations (Switzerland)
  • Richmond Fed Manufacturing Index (US)
  • RBNZ Financial Stability Report (New Zealand)
Indicative Index Dividends

View upcoming dividend adjustments for open Index CFD positions.

Articles of the Week

EURUSD: EU Recovery Plan and EU’s Frugal Four

Tuesday 26 May 2020 11:48

Was this post helpful?