In the commodity market, gold hasn’t found the strength to continue its rally after five bullish sessions. The metal is down 0.35% to $1,884 – still close to its record high set in 2011. It likely has to do with investors’ profit-taking because fundamentals would support gold right now.
Oil prices are mixed on Friday, trying to profit from a weaker US dollar. WTI futures are down 0.10% while Brent is up 0.09%. However, the general mood is bearish, as investors worry about weaker demand amid surging numbers in COVID cases and re-escalating US-China tensions. Still, markets hope that the US Congress will find consensus on the size of next stimulus packages, which might support oil.
In FX, the USD index fell to 22-month lows on downbeat labor market data. The greenback failed to leverage its safe-haven status amid Sino-US tensions. The decline in the USD comes on the back of a bullish euro, which was boosted by the European leaders’ surprising determination to deploy the 750 billion euro rescue package.
The Japanese yen rose to a one-month peak, and the Swiss franc advanced to four-month highs against the dollar. The two safe-havens are boosted by investors’ shift from the US dollar.
In fact, the markets are experiencing a structural shift from the US dollar to the euro, institutional traders claim. Hedge funds and other institutions are going long on the European currency, dumping the greenback as the US struggles to handle the pandemic.
The pound is on the neutral side, losing ground against the euro and securing gains versus the US dollar.
