By Deepta Bolaky
Risk sentiment remains fragile on Wednesday as US politics weighed on global equities. European stocks struggled for direction and were mostly in the red.
Wall Street reversed the trend and closed in positive territory. Volatility in Treasuries jumps to the highest since March as investors are concerned about the spread of the virus and the lack of fiscal support for the US economy.
Major US equity indices closed between above 1.5% higher on the possibility of a selected stimulus program may be on the table:
In the FX space, safe-haven currencies took a backseat as risk sentiment improves on Wall Street. Investors are now digesting the possibility of targeted and different forms of stimulus rather than a huge fiscal stimulus program. Major currencies were mixed against the US dollar.
Amid a relatively muted economic calendar, the price action in the currency markets revolved mostly around geopolitics. The FOMC minutes released in the US session failed to move markets:
“Participants observed that the incoming data indicated that economic activity was recovering faster than expected from its depressed second-quarter level, when much of the economy was shut down to stem the spread of the virus.”
The improvement in risk sentiment brought some relief in the energy market but crude oil prices remain underpinned by much uncertainty on the demand outlook and bearish oil reports. After the API weekly reported a build in crude oil inventories of 951,000 barrels for the week ending October 2, the EIA Crude Oil Stocks Change came in at 0.501M, above expectations (0.294M) in the same week.
As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading around $40.08 and $41.99 respectively. Traders to monitor the hurricane Delta which is expected to hit the energy-producing region of the Northern Gulf Coast in the coming days.
The precious metal was a tad bit firmer overnight on the hopes of some sort of stimulus and a weaker US dollar. As of writing, the XAUUSD pair is currently trading at around $1,885.
Source: GO MT4
By Deepta Bolaky
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|Friday, 09 October 2020
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