Eurozone On The Brink As Infections Spike

By Orbex

Beaten Down Dollar Back with a Vengeance

The US index capped its fourth positive session as it closed 0.45% higher yesterday. The main significance is that it remained above the psychological 94 handle.

Investors have turned to the currency as a haven during periods of rising financial market volatility.

The US manufacturing sector continued to show signs of recovery in September. It notched the best reading since January 2019.

However, the political instability ahead of this November’s presidential election could mean the greenback is not out of the woods just yet.

Donald Trump yesterday stated that he would refuse to commit to a peaceful transfer of power if he loses the election.

Eurozone Faces the Harsh Truth

The previously surging EURUSD continued its descent on Wednesday, closing 0.38% down.

The pair had earlier this month tested the $1.20 level for the first time in over two years.

Renewed lockdown measures in reaction to rising COVID-19 cases in several European countries have undercut ideas that Europe was handling the pandemic better than the US.

EU PMI figures showed that eurozone economies barely grew in September.

There was a plus side to the story, however, as a solution to the slowdown could spur new stimulus measures.

All Eyes On the Chancellor’s Emergency Job Scheme.

The pound closed 0.10% lower on Wednesday, its fourth decline in a row.

The UK was also feeling the effects of a spike in infections, as it recorded its third-highest daily increase since the pandemic began.

The Chancellor Rishi Sunak will unveil a plan aimed at minimizing unemployment, as the latest PMI survey showed that growth is weakening. He is looking to replace the furlough scheme which expires next month.

Economists warned that the latest restrictions could mean the economy is likely to flatline over the next few months. A full national lockdown could put Britain back into a recession.

September Sell-off Resumes

The US indices ended lower yesterday as the markets failed to capitalize on the momentum of previous sessions.

The Nasdaq was the main loser as it closed 3% lower. The S&P dropped by 2.4%, whilst the Dow fell 1.9%.

Tesla’s ripple effect from its ‘battery day’ was still felt across the markets.

Worries over a second wave of the coronavirus and an increasingly contentious US presidential election contributed to the sell-off.

Gold Continues to Lose its Shine

A strong US dollar has contributed to Gold falling to its lowest levels since July as the sell-off on the safe-haven continues.

The yellow metal closed almost 2% down to its lowest level since July.

The shift in risk appetite continues as we wait for further COVID-19 vaccination news.

Oil Unable to Maintain $40 Handle

Oil closed down for a third consecutive day, as it finished yesterday’s session 0.18% lower.

The fall under the $40 was seen as significant, despite the EIA reporting a crude draw of 1.6 million barrels for last week. This compares with a draw of 4.4 million from the previous week.

As US oil refineries try to get back to business, we await the next tropical storm to batter the American coastline.

By Orbex