The dollar remains on the offensive following a rally seen on Wednesday as traders continue to keep a cautious tone
Wall Street stocks finished sharply lower overnight as a further rise in coronavirus cases threatened the already fragile economic recovery while failed efforts to advance a coronavirus aid package weighed on investor sentiment as well. As a result, the S&P 500 lost 3.52%, the Dow shed 3.43%, and the Nasdaq Composite slumped 3.7%.
Asian shares saw moderate losses on Thursday and U.S. futures turned positive after the S&P 500 saw its biggest drop since June. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.6%. Hong Kong’s Hang Seng lost 0.4% while the Nikkei 225 in Japan fell 0.37%. During today’s meeting, the Bank of Japan kept its monetary policy unchanged, as expected. The central bank also highlighted that risks to both economic activity and prices were skewed to the downside due to the pandemic.
In Europe, equities opened higher in a sign of a recovery from yesterday’s sell-off. On the data front, Spain’s October preliminary CPI came in at -0.9% versus -0.4% y/y expected. The reading that fell to its lowest since May reaffirmed softer price pressures in the country. Other economic data and a European Central Bank meeting are the main focus later today.
Elsewhere, the dollar remains on the offensive following a rally seen on Wednesday as traders continue to keep a cautious tone. Earlier in the day, EURUSD saw some recovery attempts but failed to stage a pronounced correction and came back under pressure, threatening the 1.17 handle. In the short term, the ECB meeting could add to the negative tone surrounding the common currency if the central bank hints at additional stimulus measures during the upcoming meeting.
In other markets, oil prices keep trading around early-October lows after a plunge by over 5% on Wednesday. The selling pressure intensified after the EIA report showed that crude oil production rose 1.2 million barrels per day last week, adding to the downbeat tone in the market. In the short term, Brent crude needs to regain the $40 handle. Otherwise, further losses could lie ahead.