Key Points:

Global stocks rally on Biden win and Pfizer vaccine news

Gold falls over $100 on the day

USD slightly stronger as DXY moves to 92.80

An extremely volatile day for US stocks had seen a huge rally on the open after the futures soared on the back of Pfizer announcing their Covid19 vaccine to be 90% effective. Coupled with the news over the weekend of Biden’s election win all major indices hit all time highs before a dramatic reversal to close out the session. The Dow closed up almost 3% on the day but still 700 points of its intraday high as airline stocks and Disney (cruise ships) moved higher by double digits. The S&P500 was up 1.17% but the Nasdaq ended in negative territory -1.53% as tech stocks got hammered on the assumption that the world will no longer need lockdowns! Netflix closed down almost 9% and Zoom a whopping -17.4%. Gold moved early falling over $100 on the day having failed to make ground around 1960/65 the precious metal dropped almost in a straight line to 1850 before a slight bounce into the close. For FX it was a much calmer affair with USD weaker on the vaccine as stocks rallied EUR reached to 1.1920, AUD to 0.7340 and USD/CAD based at 1.2930 before reversing along with stocks we saw EUR back to 1.1820, AUD at 0.7280 and USD/CAD spike back up to 1.3020. Oil prices surging 8% at one point helping the loonie’s initial rally. Positive comments surrounding Brexit saw Cable moved above 1.32 briefly for the first time in two months closing around 1.3160 as the greenback reversed the selloff. The question markets are faced with now is how will this effect further stimulus? Will stocks retrace with some profit taking from here or is this a pause before another move back higher? FX seems confused but with US yields ticking higher we may see a move back into USD strength in the short term. Delivery of any vaccine will take a long time so the knee jerk reaction we’ve seen should be dismissed. Inflation data from China will be the key data driver for the upcoming session but unlikely to move price. Asian markets will be looking to digest what’s happened in the US session so we may see AUD move back to retest support around 0.7230 if it pushes through yesterday’s lows at 0.7265.

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