The day began with positive news from Europe. Consumer confidence in the UK was slightly worse than the forecast, but retail sales were significantly better. Moreover, the PMI reports from Germany all came in at 50 and over, showing that Europe’s biggest economy is once again growing.
The same goes for the eurozone-wide PMI reports. With good fundamentals and an agreement on the recovery fund, it appears that the European Union is finally well-positioned to shake off the fallout from the coronavirus pandemic.
Things are quite the opposite in the United States. The country is still struggling with the heaviest Covid-19 outbreak in the world, adding another 70,000 newly confirmed cases yesterday.
There was also an unplanned increase in the initial jobless claims yesterday. A few states remain in lockdown and with the government struggling to agree on a last-minute stimulus plan, investors are worried.
As a result, the USD is weaker today. The EUR/USD has surpassed 1.16, while the USD/JPY has dropped below the 107 level.
After the United States decided to order the closure of a Chinese consulate in Houston, now China has retaliated by doing the same with the US consulate in Chengdu. These hostile exchanges are keeping investors interested in the US-China issue, though it is unknown if the trade relationship between the world’s two biggest economies is in danger yet. President Trump has hinted that he could go back on the phase-1 deal signed early in 2020.
Still, stock markets are not taking the news very well. A decline was observed all across the globe, from Asia and Europe to the United States.
Though there is still some risk appetite among market participants, gold is gaining a lot of traction, approaching the level of $1,900.
