Markets paused on Tuesday as doubts of economic recovery resurfaced following the rising number of coronavirus cases. Major equity benchmarks lost around 1% or more overnight.
Wall Street ended deep in the red as lockdown could be back:
- Dow Jones Industrial Average lost 397 points or 1.5% to 25,890.
- S&P 500 fell by 34 points or 1.1% to 3,145.
- Nasdaq Composite lost 90 points or 0.9% to 10,344.
In the FX space, the US dollar gathered strength as a safe-haven following the sell-off in the equities market. Major currencies were weaker against the greenback. However, the British Pound advanced higher despite Brexit-related jitters.
Amid a relatively muted economic calendar, the RBA interest rate decision and statement were the main events in the Asian session. As widely expected the RBA kept interest rates unchanged at 0.25% but highlighted the uncertainty of the nature and speed of economic recovery. The Aussie dollar which was trading just below 70 US cents retreated further. As of writing, the AUDUSD pair is currently trading lower at 0.6945.
In Europe, the German Industrial Production advanced higher but missed the market’s expectations. Production in the industry was up by 7.8% on the previous month on a price but was down by 19.3% on the same month a year earlier. The EURUSD pair retreated to 1.1270 level.
Crude oil prices struggled to find an upside direction as the demand outlook remains fragile due to the fears that a second wave of coronavirus outbreak can halt activities again. The API report also shows a build of 2 million barrels in crude oil inventories. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading around $40.53 and $42.96, respectively.
The risk-aversion environment drove the precious metal higher. The XAUUSD pair traded to multi-year high just below the $1,800 mark. The doubts of economic recovery following the resurgence of virus cases remain the primary factor of caution for markets. As of writing, the XAUUSD pair is currently trading around the $1,793 mark.
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