US Dollar on the Move, Global Markets Row Back

US Dollar on the Move, Global Markets Row Back

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Key Takeaways:

• Covid-19 influences market patterns
• The EU’s financial aid package blocked by Hungary’s and Poland’s vetos

The US dollar has been on the rise on Thursday as equity markets backtrack amid increasing numbers of coronavirus cases around the world. New Covid-19 infections have put the brakes on the recent market move to the upside as restriction concerns loom. European stocks opened the session lower and are now continuing the choppy trading that was prevalent throughout the week. The markets this week are swinging from positive to negative on an intraday basis, influenced either by vaccine hopes or rising numbers of confirmed cases and tightening restrictions.

European indexes are mostly down by 1.00% with DAX in the lead down by 1.04%, followed by the French CAC 40 and UK’s FTSE 100 each down by 0.98%. US stock futures point to a lower open as well. The DJIA futures indicate a decline of 0.50% at the opening, the S&P500 futures also lower by 0.46%, and the Nasdaq Composite futures down by 0.70%.

The US surpassed 250,000 Covid-related deaths as hospitalizations reach a record of over 79,000 on Thursday. New York City has now shut its schools and states across the country are considering the introduction of various lockdown measures.

Prompt Action Required as Vetos Threaten the EU’s Relief Package

Across the Atlantic, the European Union is faced with the tough task of negotiating its relief package with Hungary and Poland, the two countries that opposed the declaration. The pandemic relief fund of EUR 1.8t shall be distributed across the EU countries. However, Hungary and Poland have vetoed the package, stating that they have been targeted as the proposal links fund transfers with the rule of law. More precisely, funding may be suspended if a member state does not comply with the values of the bloc. Hungary and Poland are being investigated by the EU for obstruction of justice and press censorship, however, both countries could receive grants of at least EUR 180 billion. European Central Bank President Christine Lagarde has stressed the need for a quick resolution of the issue as any delays create increased risks to the economy and health care system.

In Thursday’s gloomy market environment, the US dollar is posting gains across the board as market participants take on a risk-off approach to equities. The EURUSD moved from a daily high of 1.1858 to the current market price of 1.1820. The pair spiked sharply higher to the vaccine progress by Pfizer and Moderna in the past couple of weeks and went as high as 1.1919.

The GBPUSD is also on the low side, currently trading at 1.3217, marking an intraday high of 1.3276 earlier in the session. The exchange rate was favored by traders and investors this month, as it gained 4% month-to-date.

USDCAD and USDCHF are moving to the upside today, both pairs reacting to a stronger US dollar. USDCAD currently trades at 1.3115, while the USDCHF is gravitating towards 0.9134.

The gold market is showing weakness in today’s session as the price of the yellow metal dropped from $1,873 to a low of $1,855, posting its third consecutive day of losses.

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