(24 September 2020)DAILY MARKET BRIEF 2:Dollar Is Only Winner So Far
In the commodity market, oil prices are declining on Thursday, following the flash reading on US business activity that suggests a slowing recovery. Investors fear that the cold season will come with another wave of the pandemic, which will hurt oil demand. Crude prices are under increased pressure against a stronger US dollar, which makes it less attractive to global buyers. WTI is down 0.80% to trade below $40, and Brent has declined by 0.62% to $41.50. Both brands increased yesterday after the US Energy Information Administration said that crude and fuel inventories had fallen last week.
Gold cannot leverage its safe-haven status right now, as the US Congress cannot agree on further stimulus at the moment. The metal has dropped by 0.66% to $1,855, which is the lowest level in over two months.
Meanwhile, the US dollar is the winner today, as investors are looking for some refuge against risk in European and Asian markets given the rapidly increasing number of coronavirus cases. The USD is also supported by a robust US housing market. On Wednesday, data showed that the Federal Housing Finance Agency (FHFA) house price index increased to a seasonally adjusted 1.0% in July after an identical gain in the previous month. House prices surged 6.5% y/y in July, which was the biggest gain since June 2018. Thus, the USD Index is up 0.07% to 94.500, and EUR/USD is down 0.01% to 1.1658. The euro is under pressure amid fears that new lockdowns in the EU would hurt the recovery.
The pound is down against both the USD and the euro, as UK PM Boris Johnson introduced new restrictive measures yesterday and amid persisting post-Brexit pessimism, as Britain is unlikely to reach consensus on a trade deal with the EU.
