News

US Dollar Gains on Demand for Liquid Assets

USD

The dollar index, which measures the greenback against a basket of major currencies, settled higher for the third consecutive day at 97.50. The drop in Euro and British pound pushed the index higher as both currencies account for almost 70% of its basket. The British pound extended meltdown post sharp monetary and fiscal measures to offset the impact of the Coronavirus on the economy, and the euro dropped as the ECB announced new long term refinancing operation (LTRO) despite leaving rates unchanged. On the other hand, the US Treasury yields edged higher to 0.965%, and the 30-year yields advanced to 1.807%. The USDJPY jumped to 106.21, the EURUSD dipped to 1.1055, and the GBPUSD declined to 1.2490, the lowest since October 2019.

Equities

Major US stock index futures trimmed losses during the Asian session as the sharp drop triggered some short covering. Moreover, the New York Fed took steps to inject $1.5 trillion to the market in repo operations. The Dow Jones Industrial Average futures rose to 21953, after trading at 20230, the S&P500 futures rallied to 2593, and Nasdaq futures recovered to 7585.

Metals

Gold prices plunged sharply amid liquidations to cover the drop in stocks. Usually, gold acts as a haven in times of high market risks and uncertainty. However, the need for liquidity pushed funds to liquidate their gold positions. The price of a gold ounce dropped to a five-week low of $1551. Meanwhile, industrial metals such as silver and palladium dropped further where silver dipped to $15.32, and palladium futures declined to $1567, the lowest since September 2019. The gold/silver ratio jumped to a record high of 101.98.

Oil

Oil prices recovered slightly as the risk-on mood interrupted the fall in different asset classes. The West Texas Intermediate crude futures rose to $33.23, and Brent futures edged higher to $34.98.

Major Economic Events

GMT Country Event Expectation Previous

14:00

US

Michigan Consumer Expectations (Mar) 

88.2

92.1

14:00

US

Michigan Consumer Sentiment (Mar) 

95.0

101.1

17:00

US

U.S. Baker Hughes Oil Rig Count

-

682

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