Positive vaccine news boosted risk sentiment this week from Moderna and the Astrazeneca Oxford led group. Moderna’s vaccine trial produced a strong immune response for all 46 patients in an early stage human trial and the findings show the vaccine could provide protection against the coronavirus. Alongside the vaccine news the hopes of further Fed stimulus supported the risk on tone as the S&P500 tested June’s highs. Will optimistic medical news keep on supporting stocks next week or will signs of a slowing global economy weigh on investor sentiment?

Key events from the past week

  • CAD: Interest rate decision, July 15. The Bank of Canada kept rates unchanged and stated that it does not expect the economy to return to pre-covid19 levels until 2022. They also kept asset purchases unchanged. The BoC underlined the uncertainty facing the Canadian economy.
  • Oil: OPEC+ meeting, July 15. The OPEC+ panel agreed in principle to tapering production cuts in August according to delegates. The concern now going forward is that the oil market will be overwhelmed with extra supply from these cuts. Will these bring oil prices lower from here technically capped by the 200DMA?
  • EUR: Interest rate decision, Thursday July 16. The ECB left rates and PEPP purchases unchanged at their latest decision. However, hopes for fiscal unity surrounding a European Union rescue package has driven EUR demand this week.

Key events for the coming week

  • EUR: German manufacturing PMI’s, July 24. The PMI data from Germany is starting to show signs of bottoming. Will Friday’s data reassure markets that some kind of recovery is still on the way? Or will falls below 40 reveal deeper problems for Europe’s largest contributor?
  • EUR: European Recovery Fund, July 17/18. On Friday and Saturday EU policy makers will meet to discuss the €750 billion recovery plan.The main issue is whether nations like Austria, Denmark, Sweden, Netherland and Finland will block the plan. If they do block it expect EUR sellers on Sunday’s open.
  • Vaccine hopes to stimulate stocks? Will the positive vaccine news from this week lead to a strong run higher in global stocks or will weak earnings next week drag them down?