The dollar erased earlier losses ahead of Powell’s testament due later today
US stock markets closed lower on Friday, notching a third straight weekly loss, driven by rising political uncertainty ahead of elections, a fresh round of fiscal stimulus from Washington, and concerns over rising coronavirus cases globally. The Dow Jones Industrial Average closed down 0.9%, the S&P 500 index shed 1.1%, and the Nasdaq Composite Index fell 1.1%. For the week, the S&P 500 and the Nasdaq fell 0.6% each.
Today in Asia, stock markets were lower after Britain reported a rise in coronavirus infections – the government said there were 4,422 new cases on Sunday, its biggest daily rise since early May. The Shanghai Composite Index lost 0.6%, the Hang Seng in Hong Kong shed 2.6%, and the Kospi in Seoul was down nearly 1%. Japanese markets were closed for a holiday.
European stock markets opened lower on Monday, as rising coronavirus infections weigh on market sentiment while allegations surrounding bank dealings added to the negative sentiment among investors. Hong Kong-listed shares of Standard Chartered and HSBC slipped following reports that they allegedly moved large sums of suspicious funds. Against this backdrop, bank stocks fell substantially.
Meanwhile, the dollar erased earlier losses amid risk aversion and turned positive versus the euro and sterling while USDJPY derailed the 104.00 handle for the first time since March as the safe-haven yen demand persists. EURUSD was rejected from the 1.1870 local resistance, threatening the 1.18 figure ahead of Powell’s testament due later today. Should the Fed’s governor express a less dovish tone than expected, the greenback could see a more robust recovery.
Elsewhere, Brent crude turned negative on the day after a rejection from fresh two-week highs around $43.85. The futures got back below the $43 handle and could suffer further losses in the short term as virus-related fears are getting more pronounced globally, fueling concerns over recovery in global energy demand. If the pressure persists in the short term, oil prices could threaten the $42 level.
