The dollar is on the rise
The Dollar Index is rising while risk-related assets are on the backfoot during early Monday trading. The week is starting under the spell of risk aversion as the number of new COVID infections reached new records on both sides of the Atlantic during the weekend, heightening fears over new lockdowns and the economic devastation they cause. At the same time, in Washington, Republican and Democrat lawmakers remain unable to reach an agreement over the size and shape of a much-needed economic stimulus package. It is not surprising that as the second wave of the pandemic engulfs Europe and politicians in the United States continue to squabble, investors look for the comfort of safe haven assets like the dollar.
Ricardo Evangelista – Senior Analyst, ActivTrades
European stocks plunged alongside the S&P 500 at the beginning of Monday’s trading session, amid rising virus worries over the weekend. Most investors want to remain optimistic about the upside potential of stock markets but they are becoming increasingly sceptical about the next US stimulus package. In addition, recent record-breaking infection levels in many hotspots has led the EU to implement tougher restrictions (nationwide curfew in Spain, toughest Italian measures since May) which are widely expected to hurt businesses. Risk appetite has then significantly decreased today, with many investors seeking haven assets like bond markets and the US Dollar. Having said that, this week is likely to be a volatile one with a slew of major macro events. The Chinese Communist Party plenum runs until the 29th, both the ECB and BoJ have monetary meetings, US Q3 GDP figures are due on Thursday while intense Brexit negotiations continue to serve as a noisy backdrop. On the corporate front, reports from Coface, Bigben Interactive, Europcar Mobility, Twilio and Google are likely to increase market volatility during the day.
Pierre Veyret– Technical analyst, ActivTrades
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