By Deepta Bolaky
Global stocks ended mixed on Wednesday as risk sentiment remains fragile following fears of a second wave of an outbreak and the impact of the global economic recovery, geopolitical uncertainties, and limitations of central banks. European stocks fared better than its US counterparts.
Wall Street plummeted due to a heavy sell-off in mega-cap tech stocks. The share price of Apple, Amazon, and Alphabet lost between 3-4% while Tesla’s share price tanked by more than 10%.
In the FX space, the US dollar retained the King dollar status as investors fled to safety given the number of uncertainties in the financial markets. All G10 currencies were weaker against the greenback.
On the technical side, the US dollar index broke out of its bearish downtrend to test the 50-day moving average on the back of its haven status.
Amid a stronger US dollar, the Antipodeans currencies remained on the downside:
Traders are digesting the possibility of a rate cut and the option of negative interest rates which until this week was not considered as a viable option. The Aussie dollar was also under pressure following downbeat Retail Sales figures. The seasonally adjusted estimate fell 4.2% (-$1,276.3m) from July 2020 to August 2020.
The Antipodean currency remained among the worst performers. As of writing, the AUDUSD pair dropped further to 0.70 level.
Source: GO MT4
In their statement yesterday, the RBNZ reflects the possible need for further monetary stimulus and the instruments include:
The RBNZ has maintained nearly the same statement which was relatively in-line with expectations.
A series of preliminary PMI figures were released on Wednesday in the US, Germany and Eurozone area. While we note an uptick in the manufacturing sectors, there is a decline in services activity following the ongoing social distancing measures.
Crude oil prices remain underpinned by the fears of a second wave of an outbreak in the European regions, a stronger US dollar and a bearish API report. As per the weekly crude oil stock report from API, inventories rose from previous -9.517M to 0.691M in September 18.
On the other side, the EIA report shows that crude oil stocks changed at -1.6 million in the week ending September 18 which did provide some support to the oil market. However, crude oil prices remained on the downside amid the current dynamics surrounding the oil market. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading around $39.49 and $41.42 respectively.
The precious metal is bearing the brunt of a stronger US dollar and the lack of progress of the fiscal side. The XAUUSD pair plummeted below the key psychological level of $1,900. As of writing, the pair is currently trading around $1,865 level.
Source: GO MT4
By Deepta Bolaky
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|Thursday, 24 September 2020
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