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EUR/USD and Gold Fall as The US Dollar Price Extends Gains

EUR/USD and Gold Fall as The US Dollar Price Extends Gains

Equity markets fall, the US dollar extends gains Gold retreats further, what moves the indices, FX, and commodities markets today?

Equities

Global stock markets returned to flash in the red due to serious concerns over the global economic recovery. The released PMI data on Wednesday showed weakness in the services sector in Germany and the UK caused by the recent surge in coronavirus cases, while the Fed vice president Mr. Clarida stated that the US remains in a deep hole of unemployment and reiterated on the importance of the more fiscal stimulus.

ByteDance has taken another step to end the TikTok drama in the US, as applied for a tech export license in China. However, it is not clear what kind of deal it will be or if there would be any deal amid to conflictive statements from both sides. The deal needs approval from both China and the United States, while Chinese state media doubted that the deal could be approved as it was based on extortion.

Stock Market

Change %

S&P 500

-2.6%

Dow Jones

-2.4%

NASDQ

-3.3%

Japan 225

-0.1%

DAX 30

-1.5%

FTSE 100

-0.8%

CAC 40

-1.3%


Currencies

Risk related currency assets retreated against the US Dollar as the rising numbers of the Coronavirus in Europe and the UK sparked worries about a new severe lockdown in Europe and the UK.

The US Dollar index has risen on Thursday to a nine-week high at 94.54 and may continue its rally towards 95.50 after breaking the neckline of an inverted head and shoulders pattern on Tuesday.

The EUR/USD broke below the 1.1700 threshold for the first time since early August as a result, the pair’s outlook changed to negative and therefore could fall towards 1.1500 levels.

GBP/USD retreated further on the back of a strong US dollar. The pair tested on Wednesday its lowest levels in two-months and rallied after as some bears seemed to cover. Investors continue monitoring the EU/UK negotiations as the Oct 15 deadline is nearing.

Commodities

The coronavirus concerns weighed on the oil price as some countries in Europe could be heading to a new total lockdown and this would affect the global oil demand.

Brent oil failed on Wednesday to close above 42.50 hence the price could point lower for a test of 39.60, while the US Crude may fall towards 38.37.

This week the Gold price changed its technical outlook to negative and fell on Thursday to a nine-week low at $1,848. Bears could press towards $1,796.

Looking Ahead

Markets eyes will be on the US initial jobless claims at 1:30 PM (GMT), then at 3:00 PM markets will listen to the Bank of England’s speech and the US Fed chair testimony before the US Congress then the Fed members Evans and Williams speak at 3:00 PM and 7:00 PM respectively.


This information/research prepared by Mahmoud Alkudsi does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk. The research provided does not constitute the views of JME Financial Services (Pty)Ltd nor is it an invitation to invest with JME Financial Services (Pty)Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of the date the report is published, the research analyst and his/her spouse and/or relatives who are financially dependent on the research analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities). The research analyst in not employed by JME Financial Services (Pty)Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation or particular financial needs before making a commitment to invest. The laws of the Republic of South Africa shall govern any claim relating to or arising from the contents of the information/ research provided.