- US Markets Look to Bounce Back From Big Dip
- EUR/USD Shows Slight Recovery
- Door Closes on US Stimulus Hopes
Wall Street endured a torrid start to the week with all the major markets taking a tumble yesterday. The Dow Jones finished the day with a 650 point loss having dropped as much as 1,000 points at some stages. This impacted the forex market yesterday with many retreating to the relative safety of the Dollar. The Euro showed a slight recovery today though the area is also struggling with increasing COVID-19 case numbers. Any hopes of a US stimulus relief bill also look dead as the Senate breaks before the November 3rd election.
US Markets Look to Bounce Back
A rising number of coronavirus cases across the nation saw markets tumble to their worst day in almost 2 months on Monday. Many analysts believe this to be from a combination of factors not least that a huge spike in virus cases was reported over the weekend. This may also be indicative of a pre-election pullback as traders wait to see what happens on November 3rd.
For those forex trading, this meant a swift move back to the US Dollar from many. Gold prices also took an upward turn yesterday with many avoiding the currency market in favor of the precious metal as a layer of uncertainty remained around the market. A pick-up in precious metal trading and prices of gold and silver is not uncommon as a hedge against economic uncertainty as can be seen with both near record highs in 2020.
Euro Continues to Hang On
Moving into Tuesday, as markets show more positive signs forex brokers have noted that the Euro has managed to hold on to its $1.18 level. This shows a modest recovery for the currency but this has been tempered with caution as the bloc is struggling with many of the same issues as the US in rising case numbers.
France, Spain, and other countries have started to re-impose restrictions with German Chancellor Angela Merkel warning of difficult months ahead. The European Central Bank is set to meet later this week to discuss the second wave and any action they may take though there does not seem to be anything immediately planned to further support the economy until at least December.
US Stimulus Unlikely as Senate Recess Starts
Another factor that may have weighed on the markets is the lack of agreement over a US stimulus package. This had been widely discussed over recent weeks but both sides have ultimately failed to reach agreement. With the US Senate now moving to their October break, any agreement seems very unlikely.
With the US Presidential election now just one week away the focus will shift to who gets elected and their plans for a stimulus deal in the early part of the next Presidential term. For the moment, both seem to be using the lack of agreement to point to failings by the other to provide economic support.