It was a dull start to the week, with the greenback ending the day lower against most major rivals. Market players got caught between the continued increase in U.S coronavirus cases and news indicating progress in another vaccine. The EURUSD rallied on hopes EU leaders will agree on a recovery fund.
The GBP/USD pair settled at its recent tops in the 1.2660 price zone. BOE’s Haldane said that policymakers would consider negative rates “if there was a further negative shock to the economy.” Commodities rallied with silver flirting with $20 an ounce, its highest since August 2016, while gold surged to $1,817 a troy ounce. Crude oil prices reversed an early dip and closed the day with modest gains.
The S&P 500 ended +0.84% at 3,251.84, the Dow finished +0.03% at 26,680.93 and the Nasdaq was higher by 2.51% to finish at 10,767.09.
Dollar sell-off was the theme on Tuesday, as the American currency plunged against all of its major rivals due to optimistic news and technical analysis. The EUR/USD pair surged to 1.1539, underpinned by news showing that EU leaders finally agreed on a coronavirus recovery fund of €750 billion, which will include €390 billion in grants.
GBP/USD surged on broad dollar’s weakness in spite of growing tensions between the UK and China. USD/JPY fell to the lower end of its monthly range, bouncing just modestly from the 106.60 price zone. Gold surged to its highest since September 2011, printing $1,843.46 a troy ounce, ending the day a little below the level.
The S&P 500 rallied 5.44 points (+0.17%) to finish at 3,257.28. The DJI soared 159.53 points (+0.60%) to end at 26,840.40. Nasdaq shed 86.73 points (-0.81%) to end at 10,680.36.
On Wednesday, the market mood was distasteful as the US State Department ordered Beijing to close its consulate in Houston within 72 hours, while China considered the closure of the US consulate in Wuhan. The dollar continued to shed ground against most of its major rivals except the JPY, reaching fresh multi-month lows across the board.
EUR/USD flirted with 1.1600, ending the day not far below it, as investors continue to celebrate the agreement on the EU recovery fund. GBPUSD ended the day with little change at around 1.2740. Brexit woes weighed it down initially but, the pair trimmed intraday losses on the back of the dollar’s weakness.
Other commodity currencies capitalized on dollar weakness to rally to fresh multi-month highs. Gold surged to a multi-year high of $1,870 a troy ounce, Crude oil prices ended stable at around their recent highs, with WTI settling around $42.00 a barrel.
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The American dollar suffered from another sell-off on Thursday, with the EURUSD reaching fresh multi-month highs around the 1.1620 level. The GBP/USD pair was unable to extend its gains, ending the third consecutive day with a little change in the 1.2740 region, as the Pound took a hit from Brexit.
The USD/JPY pair once again approached the base of its latest range, heading into Friday trading some pips above the 106.60 support level. Crude oil prices edged lower in a risk-averse environment, but gold prices surged to fresh multi-year highs. Spot gold hit $1,898.37 a troy ounce, finishing the day around 1,887.
The Nasdaq Composite dropped 244.71 points, or 2.29%, to 10,461.42. The Dow Jones Industrial Average fell 353.51 points, or 1.31%, to 26,652.33. S&P 500 slid more than 1%, losing 40.36 points, or 1.23%, to 3,235.66, snapping a four-day winning streak with its biggest daily percentage drop since June 26.
On Friday, dollar’s sell-off extended into the weekly close, as risk-aversion was unable to trigger flows to the American currency. Tensions between the US and China, and the coronavirus developments in the world’s largest economy, were the main reason behind the greenback’s weakness.
Euro, the shared currency soared, backed by hopes surrounding the EU recovery fund agreed last week. The Pound, on the other hand, advanced just modestly amid persistent Brexit-jitters. Safe-haven JPY and CHF appreciated sharply against the greenback.
Commodity-linked currencies, on the other hand, were trapped between the dollar’s weakness and the poor performance of equities. Gold soared, setting at around $1,900 a troy ounce, its highest since September 2011. The bright metal traded roughly $20.00 below its all-time high.
Written by;
Nnadi Victor
An Independent Economics Researcher
