Greenback regains lost ground
The US index held on to the 93 handle yesterday as it closed almost 0.50% higher.
The move came as investors became cautious after a Johnson & Johnson COVID-19 study was paused, reducing optimism about a vaccination.
In addition, dollar gains appeared to correspond with a downshift in market sentiment. This comes as hopes dimmed that a fiscal stimulus deal could be reached before the presidential election.
As Donald Trump declared that he is now immune from the coronavirus, an American patient yesterday contracted the virus for a second time.
This could lead to more negativity towards the President as Biden extends his gains in the national polls.
EURUSD Loses 1.18 as Market Sentiment Deteriorates
The euro registered its biggest single-day loss since August as it closed 0.56% lower on Tuesday.
The recent dollar strength added to the negative sentiment hovering around the eurozone.
German ZEW index data showed a larger than expected decline of economic sentiment in October.
Investors expressed concerns around the ever-growing pandemic levels and the prospect of the UK leaving the EU without a trade deal.
Meanwhile, the Czech Republic and the Netherlands are the latest nations to impose stricter anti-COVID restrictions.
Pound Dives as Brexit Negotiations Approach Deadline
The pound had a day to forget as it closed over 1% lower yesterday.
UK unemployment rates were at their highest level in over three years as the pandemic continues to hit jobs.
It comes as the government prepares to impose tough local lockdown rules that will force some businesses to close, potentially leading to more job losses.
Prime Minister Johnson originally declared that the UK will ‘move on’ if a trade deal was not in place by the 15th of October. As we approach that deadline, we now look ahead for the next twist in the Brexit saga.
Wall Street Loses Ground
US indices witnessed a slight sell-off on Tuesday as all three major indexes closed lower.
However, a gain in Microsoft shares helped mitigate the tech-heavy Nasdaq’s losses.
The recent spike in coronavirus cases, coinciding with big drug companies halting vaccine trials, saw a shift in sentiment away from equities.
Gold Takes a U-Turn
Gold closed sharply lower yesterday, falling through the $1900 barrier and ending the session 1.68% lower.
A bout of risk aversion occurred over the strength of the greenback, as the lack of progress over extra fiscal stimulus measures loomed.
Selling pressure will be a key focus going into today’s trading, as the yellow metal looks to recuperate its $30 decline.
Strong Chinese Data Supports WTI
Oil bounced back almost 2% higher on Tuesday as it once again steadied itself above $40.
This move came in response to upbeat figures from Chinese trade data. Imports expanded sharply by more than 13%, adding to hopes of a recovery in the demand for the commodity.
We now await crude oil supply data from the API later today.