Article Hero

EUR/USD Price and Gold Fall as US Dollar Reverses Higher

1605784346.jpg
Miguel A. Rodriguez
Miguel A. Rodriguez
05 November 2022
Investors take a step backward as the US possible lockdown overweighs Vaccine’s optimism.

Weaker Risk-on Sentiment

 

Global stock markets retreated further on Wednesday on markets fear from the likely shut down in the US as COVID-19 cases continue its upward trend. Investors ignored Pfizer update about even 95% success rate of the coronavirus vaccine’s trials and cut back some of their long positions on major US indices.

 

Markets know that Pfizer’s and Moderna’s vaccines need time to get the necessary approval from health regulators and there are some logistical issues when it comes to distributing the vaccine. Putting that aside, even with rolling out the vaccine restriction measures will continue until a decent level of immunity of the virus is available.

 

Based on the above and the lack of a new fiscal stimulus package and the unlikelihood of passing it in Congress until after the new administration takes over the market closed in the red yesterday.

 

  Stock Market

Change %

S&P 500

-1.3 %

Dow Jones

-1.2%

NASDQ

-0.8%

Japan 225

-0.9%

DAX 30

-0.3%

FTSE 100

-0.6%

CAC 40

-0.4%

 

EUR/USD and Main FX Markets 

The greenback reversed higher on weaker risk-on sentiment in the market. That said, the US Dollar index outlook remains neutral while above September 1 low at 91.72.

The EUR/USD failed to rally above 1.1909 then pointed lower eyeing a test of the low end of the current trading zone 1.1620 – 1.1909.

The GBP/USD rebounded around 1.3300 and fell for a test of 1.3184. A close below that level could change the pair’s outlook to neutral.

 

Gold and Oil  

The oil traders are considering the surging coronavirus cases that may force more countries to shut down some parts of their economies and consequently reduce oil demand but also take into account the possibility of OPEC+ to extend output cuts in the Q1 of 2021 to maintain price stability. Therefore, the Brent Crude failed on multiple occasions to overtake $44.50 indicating that the upward trend is losing momentum.

The Gold has tested today the $1,861 then rallied, a close below that level will change the precious metal outlook to negative and may encourage bears to press towards $1,796/oz.

 

Looking Ahead

Investors will follow the US jobless claims numbers with the Fed Mester’s speech at 2:30 PM (GMT) then the US home sales numbers at 4:00 PM and Fed Mester’s speech at 6:35 PM. 

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

Share this article

How did you find this article?

Awful
Ok
Great
Awesome

Read More

Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.