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A positive day for USD and Gold But negative for Oil and Stock markets

A positive day for USD and Gold But negative for Oil and Stock markets

A positive day for USD and Gold: The dollar held steady today, Tuesday,
and Asian stocks gradually declined, but gold rose while oil declined as the new Coronavirus strain in the UK led to a lockdown affecting more than 16 million people in the country, and caused many countries around the world to close their borders with the United Kingdom. 

On the other hand, the US Congress has approved the expected relief package worth $900 billion,
and traders are waiting the final approval from the US Senate. 

Oil is still bleeding 

Oil prices continued today, Tuesday, to decline with increasing fears of a mutation of the Corona virus that is 70% more virulent than the current virus. 

Brent crude fell to about $48, after losing more than 2.5% on Monday,
while US West Intermediate crude is trading at the rate of $ 46.6 a barrel. 

The United Kingdom took a decision to quarantine more than16 million person in London and other countries,
so as to limit the spread of the new strain. 

On the other hand, the US dollar rose as a result of this news,
as it was positively affected by the increased demand for it as a safe haven currency,
which made oil to be less attractive to traders. 

A stronger dollar makes raw materials denominated in that currency,
such as oil which is more expensive for holders of other currencies. 

Fears have increased that the new strain of Corona virus, Covid-19,
may disrupt the recovery of oil demand during the coming period,
after the market was optimistic that this epidemic would end with the support of vaccines.
Oil has risen of about 30% in the last two months,
but it has started on its down word path since yesterday, Monday. 

High stability in gold prices today 

Gold prices stabilized today at a high level,
after the US Congress finally approved a $900 billion stimulus package as a relief from the consequences of the Corona virus. Inflation expectations are still rising, and traders are turning to gold as a hedge against it. 

This does not mean that it is a final approval for the package; rather Senate approval of the package is required. 

This news pushed gold to a reasonable increase,
after the losses suffered by gold on Monday due to investors’ preference for the dollar as a safe haven. 

Gold is now trading near the level of $ 1878 for an ounce, up by 0.4%,
and thus after it reached $1883 an ounce earlier in the session.
And gold lost nearly 1.3% of its value on Monday. 

The stimulus package alone was not supporting the precious metal,
as fears of the emergence of a new strain of the Corona virus is weighing on other markets,
and makes investors away from risk and resort to a safe haven. 

Many countries have taken strict decisions regarding travel to the United Kingdom,
where they stopped all flights to and from it until the stability of health conditions.

The dollar continues to strengthen.. And the sterling weakens significantly 

In foreign exchange market, the dollar continues to trade strongly,
but it is below the level it recorded on yesterday, Monday,
as the approval of the US relief package affected the green paper currency,
after it made clear progress after the discovery of the new strain.

 The pound and the New Zealand dollar fell against the US dollar by 0.5%,
while the Australian dollar fell by 0.4%, and the euro fell by 0.2%, to trade at $ 1.22. 

The pound fell significantly yesterday, to its lowest levels in ten days by 2.5%,
after the decisions taken by European countries to suspend flights with Britain,
in addition to the stalled negotiations on Britain’s exit from the European Union. 

The dollar did not gain significantly today,
as liquidity decreased after many traders exited the market at the moment due to the approaching holiday season,
which disrupted the rally of the green currency strongly. 

Experts expect that the euro and sterling will continue to weaken during the coming period,
as general restrictions will be tightened in the United Kingdom,
which will face great pressure after closing borders with neighboring countries,
in an attempt to contain the new highly contagious strain.

Divergence in global stock markets 

The reaction of US stock indices to the events of Monday was mixed, as the Dow Jones rose slightly,
while the Nasdaq and S&P 500 indices declined. 

The Dow Jones Industrial Average rose 0.12%, adding 37.4 points, to trade at 30,216.45 points.

The Standard & Poor’s 500 fell, by 0.39%, by 14.49 points. 

The US stock market was under pressures after talking about the new dynasty, in addition to the US Congress’s decision. 

On the other hand, Tesla’s shares fell by 6.5% on Monday,
in the first days of the stock’s inclusion in the Standard & Poor’s Index. 

Shares of Nike rose 4.9%, supported by an increase in profits and revenues during the second quarter of the fiscal year 2021. 

The travel and tourism sector was the most negatively affected sector in yesterday’s session,
as Delta Air Lines fell by 1.3%, the Royal Caribbean Group by 0.6%, and Norwegian Cruise Line Holdings by 1.5%. 

Surprisingly, Pfizer stock fell by 0.8%, despite the European Union’s approval to use it,
as the news of a new dynasty seems to have affected it as well. 

In European markets, speculations are increasing about a slight rise,
in an attempt to recover after traders made outright selling during Monday’s session,
as news of the new Corona strain affected the sentiment. 

According to IG data, the British FTSE 100 is expected to open above 6420 points,
while the German DAX index is expected to add 70 points to trade at 13320,
in addition to the French CAC index rising by 30 points to trade at 5422 points. 

The Asian stock market declined today, Tuesday, and extended its losses for the second day in a row, with increasing fears of the epidemic situation. 

The Japanese Nikkei index fell by 1.1%, to trade at 26.439.89,
while the Chinese Hang Seng Index fell by 0.8% to 26.092.17,
and the Korean Kospi Index fell by 0.8%0 to trade at 2753.89. The Shanghai Composite Index declined 1%, to trade at 388.16.3 points.

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