In the commodity market, oil prices are retreating from their regional peaks after Trump’s cancellation of stimulus negotiations, as investors are worried that the lack of government support will hurt consumer demand for oil. Meanwhile, the American Petroleum Institute (API) reported an increase in crude inventories by 951,000 barrels for the week ending October 2, while analysts expected a drop by 831,000 barrels. Investors will monitor data from the US Energy Information Administration (EIA), scheduled for later today. Both WTI and Brent have lost over 1.1%, trading near $40 and $42, respectively. Still, some support persists as many producers in the US Gulf Coast have shut down operations to prevent damage from forming Hurricane Delta.
Gold has also been affected by Trump’s surprising move. The metal is now down over 0.80% to $1,892. Still, gold is now bouncing back from daily lows. The metal can’t leverage its safe-haven status even as several US states have reported record daily numbers of COVID infections and have introduced fresh restrictions.
In FX, the US dollar is up as risk appetite has been damaged by the US president. The USD Index is now up 0.10% to 93.833. EUR/USD is still up to 1.1740. Yesterday, European Central Bank (ECB) President Christine Lagarde said that Europe’s recovery looks more sluggish as the second wave of the pandemic knocks on the door, but the central bank is ready to inject more cash to support growth. She predicted that Europe’s output wouldn’t return to pre-COVID levels until 2022.
The pound is up against both the USD and the euro amid growing Brexit talks optimism in the 24th hour of negotiations between the UK and the EU. Still, the chances for a no-deal divorce are considerable.
