Dollar Races Higher on COVID19 Panic

Dollar Races Higher on COVID19 Panic


The dollar index, which measures the greenback against a basket of major currencies, remained strong against rivals trading at a two-week high 97.58 supported by growing demand for dollar safety. The increasing coronavirus cases in different states and Beijing triggered resurgence fears, weighing on prospects of fast and firm economic recovery, forcing investors to rush for safer assets. The EURUSD declined to $1.1185, and the risk-sensitive AUDUSD fell to $0.6835.


The British pound plunged sharply following the Bank of England monetary policy meeting. The bank left interest rates unchanged at 0.10% but expanded its asset purchases program by an additional 100 billion pounds. The Sterling came under pressure as investors believe that these actions are not enough to ensure a rapid recovery. Governor Bailey stated that the monetary policy committee didn't discuss applying negative interest rates or yield curve control. The GBPUSD tumbled to $1.2403, and the GBPJPY dropped to a three-week low of 132.40.


Major US stock benchmarks continued to trade sideways in a range awaiting a clearer picture. Investors are assessing the latest surge in COVID19 cases, and the probability of closing the economy again. Meanwhile, there are increased possibilities of further fiscal stimulus from Trump's administration. During the Asian session, stock-index futures edged slightly higher on reports that China is considering the ramp-up its US farm purchases. The Dow Jones Industrial Average futures rose to 26134, the S&P500 futures rallied to 3123, and Nasdaq futures advanced to 10075.


Precious metals prices continued to trade in a tight range awaiting fresh fundamental drivers. The price of a gold ounce is trading slightly above $1730, the price of a silver ounce is holding steady near $17.55, and palladium futures hovered around $1920.


Oil prices soared as OPEC+ members promised to meet their supply cut commitments. Oil producers that didn't comply with the cuts in May, such as Iraq and Kazakhstan, promised to compensate. The West Texas Intermediate crude August delivery rose to $39.94, and Brent Blend August delivery advanced to $42.41.

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