Pelosi-Mnuchin Finally Reach Agreement
The US index closed 0.44% higher on Tuesday as it rose above 94 for the first time since July.
The ascension on the greenback was buoyed as a stopgap bill was passed that would fund the government. Talks of a shutdown were muted as the measure will keep federal agencies fully up and running until December.
The move indicates receding differences between the Republicans and the Democratic party. This, in turn, can help tackle the halt over the coronavirus aid package.
Fed Chairman Powell also reiterated the need for further stimulus as he warned the recovery will suffer without it.
In addition, sales of previously owned homes in the US remained at their highest level since 2006 in August. This capped off more positivity for the dollar.
Euro Breaks $1.17
The euro closed 0.52% lower as it broke through the 1.17 handle yesterday.
A strong dollar as well as the ECB talking down the exchange rate weighed on the EURUSD pair.
A pickup in European consumer confidence could not turn the bearish tone of the euro. Concerns were raised as infections have returned close to peak levels in some countries such as Spain and France.
Could New Restrictions Lead the Way to Another Lockdown?
The pound capped its third daily decline as it closed 0.61% lower on Tuesday.
Recently announced restrictions on the UK public will be brought into force on Thursday. The Prime Minister has stated that the new measures could stay in place for the next six months.
Another lockdown was avoided, but due to the spike in infection rates, could this be the last roll of the dice before stricter rules are enforced?
Indices Get a Lift
US indices closed in positive territory on Tuesday for the first time in three sessions. This came after testimony from top government officials rekindled hopes for more stimulus from Congress.
Should further talk come to fruition, this could lead the indices to search for fresh highs.
The S&P 500 gained 1.1%, while the tech-rich Nasdaq rose 1.7%.
Amazon was the main mover as it got positive news in the form of an upgrade. Tesla, on the other hand, saw shares decline by 7% as the promised ‘battery day’ innovations remain 3 years away.
Gold Licks Its Wounds
Gold stumbled on Tuesday as it closed 0.66% lower and past the $1900 handle.
The sell-off continued from the start of the week as risk aversion remained.
However, US-Sino tensions were back in the headlines which could shift the risk appetite. President Trump last night blamed China for the spread of the coronavirus at the annual UN General Assembly in New York.
Can the yellow metal find support soon or are we heading to pre-pandemic levels?
Build From API Drops WTI To $40
Oil closed 0.15% down yesterday as it shifts closer to the $40 region.
Oil inventories rose just shy of 700 thousand barrels last week according to the API stock change.
As we see a second wave of COVID-19 gathering steam, along with record amounts of hurricanes, could we see a dramatic sell-off in WTI?