APAC Morning Update - 12 Nov 2020

Australian Dollar

The AUD is holding comfortably above 0.7250 and has had another strong night, on the back of an improving risk appetite, and the positive news from Pfizer around the potential COVID vaccine. There is obviously more testing to come, but risk currencies across the board have seen gains, following equities higher.

The AUD/USD has been testing 0.7300 for the last week, and has failed to break through and hold.

New Zealand Dollar

The NZD is holding comfortably above 0.6800 after the RBNZ announcement yesterday. Governor Orr also suggested is was “too early to tell” whether a cut into negative territory was needed. The market is now pulling back on its expectations of an OCR cut next year fuelling the NZD higher to levels not seen since April 2019.

New Zealand has had a resilient economy to date, and a combination of good news on the vaccine front, and a strong local housing market has reduced the potential need to cut rates next year.

Are we in for another NZD Santa rally going into Xmas?

Europe and the UK

There is a lack of progress in the Brexit negotiations, which won’t come as a surprise to anyone. A deal is unlikely to be reached this week, and talks will probably go on into next week. It was never going to be smooth sailing, and any boost of the news of a vaccine, has been tempered by the lack of progress on a Brexit deal.

Europe and Britain have been some of the hardest hit areas for COVID, so the Pfizer news will be encouraging.

Equities

Wall street’s main indexes are higher overnight, as signs of a working vaccine and hopes of a faster than expected economic rebound, with tech stocks bouncing back.

The demand for stocks sensitive to economic outlook were bought, which is encouraging.

Tech heavy "stay at home” stocks also gained in a positive session for the equity markets.

Plan of action

We are continuing to see huge overnight moves in the currency, and market orders at higher levels here have been working well for most of this year. Protect your costing levels, and look at overnight market orders around the 0.7275 and 0.7300 levels.

Global equity markets are mixed - Dow -0.3%, S&P 500 +0.5%, FTSE +1.4%, DAX +0.4%, CAC +0.5%, Nikkei +1.8%, Shanghai -0.53%.

Gold prices are down 0.8% to USD$1,862 an ounce and WTI Crude Oil prices up 0.5% to US$41.6 per barrel.