Dollar Soars as European Currencies Plunge

Dollar Soars as European Currencies Plunge


The dollar index, which measures the greenback against a basket of major currencies, extended upside rally rising to a four-week high of 93.62, boosted by the fall of European currencies. The British pound and the Euro account for almost 70% of the dollar index basket, meaning that their weakness would boost the dollar. The Sterling fell sharply amid growing prospects of hard Brexit, as Boris Johnson threatens to walk away from the treaty. On the other hand, the single currency lost ground ahead of the ECB monetary policy meeting tomorrow weighed down by the comments of the ECB Chief Economist Lane on the strength of the EURUSD. The GBPUSD plunged to $1.2919, the lowest in almost six weeks, and the EURUSD dipped to $1.1756.


Major US stock-index futures rebounded slightly, after recording a sharp drop following the Labor Holiday. Investors are worried about the resurgence of the COVID19 catastrophic impact on the economy, especially after AstraZeneca stated that it is putting on hold its late-stage trial for the COVID19 vaccine. The hopes of reaching a vaccine managed to bolster investors' risk appetite during the past couple of weeks. The significant drop that started last Thursday triggered investors' interest to join the preceding uptrend as stock benchmarks dropped more than 6%, and Nasdaq tumbled 12%. During the early hours today, the Dow Jones Industrial Average futures rose to 27632, the S&P500 futures rallied to 3353, and Nasdaq futures jumped to 11198.


Gold prices hovered around $1930 during the early trading hours today. The fall in US yields triggered a rebound in gold prices after testing a low of $1906. Meanwhile, the price of a silver ounce held steady near $26.70, and palladium futures recovered to $2300.


Oil prices extended decline weighed down by fears of low demand. The resurgence of Coronavirus in several countries, and the halt of late-stage vaccine trial by AstraZeneca, raised woes over the economic recovery, which would weigh on demand levels if disrupted. The West Texas Intermediate crude October delivery tumbled to $36.10, and Brent blend November futures plunged to $39.30.

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