By Deepta Bolaky
Global equities fell on Monday – European stocks tanked and dropped the most in three months following the renewed fears of a second wave of coronavirus in the European Union and the United Kingdom. Major European stocks dropped by more than 3% yesterday.
Wall Street also struggled to edge higher following the broad-based selling off in the stock market. The US shares were further underpinned by the political risks ahead of the US election. The new disagreement is about the replacement of Ruth Bader Ginsburg as Democrats are arguing that justices should not be approved in an election year:
In the FX space, major currencies were weaker than the US dollar. Amid the renewed concerns over the pandemic and the sell-off in the stock markets, the US dollar gathered strength on the back of its safe-haven status. Other safe-haven currencies like the Japanese Yen and Swiss franc held better against the greenback compared to commodity-related currencies.
On the economic front, it was a relatively muted calendar with central banks speeches and the Chicago Fed National Activity Index. The index shows slower but still above-average growth in August – the index declined to +0.79 in August from +2.54 in July.
Crude oil prices were seen trading lower following the renewed strength in the US dollar. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading around $39.67 and $41.44 respectively. Given the ongoing uncertainty on the demand outlook and renewed fears about the pandemic, traders are to monitor the weekly oil reports for fresh trading impetus.
Despite the risk-off sentiment prevailing in the financial markets on Monday, the gold price which was finding support around familiar levels around $1,950 fell sharply. The XAUUSD pair dropped below the $1,920 level dragged by a stronger US dollar. As of writing, the pair is currently trading at $1,917.
By Deepta Bolaky
Key upcoming events
|Wednesday, 23 September 2020
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