Asian markets began the week weakly, while oil and the euro have been under pressure, as the reinstatement of COVID-19 limitations in Europe and rumors of accelerated tapering by the US Federal Reserve kept traders on edge. Oil stocks fell about 1 percent at the outset, pushing Brent oil and US crude to 7-week lows of $78.05 and $74.76 per barrel, respectively, due to oversupply fears. Australian shares slumped 0.4 percent, with bank stocks leading the way. Japan’s Nikkei (.N225) fell 0.3 percent, while MSCI’s broadest index of Asia-Pacific equities (.MIAPJ0000PUS) remained unchanged.
There are concerns about Europe’s and the European country’s economic resiliency, which has been compounded by the week’s protests and rates of infection.
Against that environment, it’s difficult to envision the US dollar deteriorating.
The euro fell 0.2 percent to $1.1280, approaching a sixteen-month low. The common currency was the primary mover in marketplaces in past sessions, as speculators bet on Europe’s GDP trailing far behind the recovery in the United States.
Bonds, gold, and the yen all benefitted as well from the current caution trend in financial markets.
On Monday, the return on the benchmark 10-year US Treasury note remained unchanged at 1.5634 percent. At $1,845 per ounce, gold received support. The yen was trading at 114.09 per dollar. The risky Australian dollar also dropped to a 7-week lowest of $0.7227.
South Korean equities (.KS11) were an anomaly, as chip manufacturers led their U.S. rivals higher on the back of a better outlook for memory chip consumption.
The S&P 500 futures increased 0.2 percent after Wall Street benchmarks fell on Friday. Trading in the U.S. is expected to be light in the week due to Thanksgiving, but the conservative approach has investors once more watching COVID-19 cases in Europe as well as central bank speakers, especially in Britain and Europe.
Austria went into its 4th lockdown on Monday, with neighboring Germany preparing to do the same, as rallies against limitations erupted throughout the continent.
Surveys scheduled this week in Europe and the United Kingdom are anticipated to reflect a steady decline in production and sentiment. The mixture of COVID, growth and geopolitical tensions in the eurozone favors safe-haven investments. The latest fall below the EUR/USD $1.15 barrier, as well as the subsequent plunge downhill, has caused people to cut their estimates for the currency pair even further.
However, the US economy has surprised economists recently with bigger and more powerful retail sales numbers and scorching inflation. This week’s emphasis is on pricing and the employment market, as well as what the Fed might be doing about its resilience.
Accelerating the tapering process may be worth addressing at the meeting in December. On Monday, China maintained its baseline lending rates for business and household loans for the nineteenth month in a row, as predicted.
South Korean and New Zealand central banks are intended to increase interest rates this week, with swap markets pricing in a 40 percent possibility of a 50 basis point boost in New Zealand. Bitcoin has been under fire after having perhaps the worst week in 2 months, and it was the last trading at $58,180.