The rising greenback keeps the euro on the defensive for the fourth day in a row
Wall Street stock markets finished higher overnight, erasing earlier intraday losses despite lingering worries about renewed coronavirus lockdowns and rising political uncertainty in the U.S. Federal Reserve Chairman Jerome Powell pledged continued support for an economy while adding that the economy has improved. The Dow Jones Industrial Average rose 0.5%, the S&P 500 gained 1.05%, and the Nasdaq Composite gained 1.7%. The S&P 500 and Nasdaq both ended four-day losing streaks.
Asian stocks were mixed on Wednesday, struggling to build on Wall Street gains amid the persisting uncertainty surrounding the coronavirus pandemic, US-China relations, and economic recovery from the current crisis. Tokyo’s Nikkei 225 and the Hang Seng in Hong Kong finished nearly unchanged,
The Shanghai Composite inched up 0.16% and Australia’s S&P/ASX 200 jumped 2.4% after the official report showed that retail sales fell 4.2% from the month before in August, much less than the 11% forecast.
In a sign of improving risk sentiment, European stocks opened in the green as investors shrugged off mixed purchasing managers data. The IHS Markit flash Eurozone manufacturing PMI rose to 53.7 from 51.7, while the services PMI dropped to 47.6 from 51.9 in September. The Stoxx Europe 600 index rose 1.1%, the German DAX climbed 1.4%, the French CAC rose 1.6% and FTSE 100 index gained 1.7%.
Elsewhere, the dollar keeps rising versus major rivals on Wednesday, keeping the euro on the defensive for the fourth day in a row. EURUSD stays under pressure after a break below 1.17 and dipped to late-July lows around 1.1670 in recent trading. In the short term, a bullish move seems unlikely, especially after the recent Lagarde comments on the rising European currency. Later in the day, US PMIs will affect the pair’s dynamics.
Meanwhile, gold prices keep losing ground for the third consecutive day. The precious metal dipped to fresh August 12 lows in recent trading and could now threaten the $1,870 handle if the pressure persists. The key reason behind the weakness in gold prices is the rising dollar that capitalized on the recent risk aversion. In the longer term, gold could resume the ascent from lower levels amid the persisting threat of a second wave coupled with political uncertainty in the US ahead of the November elections.