The dollar continued to soar on Wednesday, hitting highs against several major currencies, including the Pound, the Australian dollar and the New Zealand dollar. The dollar index rose to 101.74, the highest level since March 2017.
In response to the spread of the virus, the European Union announced that it would close its borders for 30 days and ban non-EU citizens entering. European Commission President Von Delane said further measures could not be ruled out. More than 61,000 people have been diagnosed with the new coronavirus in Europe, with Italy having the most severe outbreak. Some analysts believe that in addition to hitting the already fragile Eurozone economy, the epidemic will likely trigger a debt crisis again in the Eurozone .
With the global financial market turbulence, silver, one of the commodities, also collapsed. Although gold also fell as much as 250 US dollars from the top, the gold/silver ratio rose to 123 level, a record high.
Oil prices fell in the Asian session on Wednesday, trading around the four-year low. WTI is trading below $27 level while BRENT is trading below $30. Investors are still worried about the global outbreaks of the coronavirus, making a severe impact on global economic performance and the demand for energy.
After the European market open, the US Oil was trading above $30 level. With the recent collapse of the stock market and the “oil price war” led by Saudi Arabia, selling pressure of the oil prices was not as strong as expected. Many central banks, governments and international organizations have jointly launched stimulus policies, which will have a certain stabilizing effect on the oil market, lead to consolidation.
As a safe-haven traditionally, gold fell for several trading days already, even the new coronavirus pandemic caused a big drop in global stock markets. It is reported that investors sold their gold holdings to cover cash losses incurred elsewhere.
It is a “Black Monday” for the US stock market again, triggering the fourth market halt in history! The three major Wall Street indexes closed down sharply, of which the S & P 500 index fell about 12%, the biggest drop since “Black Monday” 30 years ago.
At present, most of the analysis believes that the Fed’s policy can only alleviate the market liquidity issue, but it does not have much real effect on the risk of recession caused by epidemic factors. The market reaction on Monday hinted that investors were more worried rather than more confident. Regardless, participants in the market will still digest the Fed’s latest “big” move.
Before the market open this week, the Federal Reserve significantly reduced the fed fund rate from the target range of 1% – 1.25% to 0% – 0.25%, and also announced the implementation of quantitative easing (QE) on the scale of US $700 billion. The market sentiment has improved for a short time, but is still pessimistic. At the current European session, global stock markets are still gloomy.
Before the market open today, the Federal Reserve suddenly further cut the interest rate by 100 basis points. Australia, New Zealand and Japan also announce the stimulus plan together, in order to deal with the impact of the global epidemic, stimulate the frozen economy. However, market concerns have not eased and selling pressure continues. At present, the Dow futures are still falling around 1000 points. Oil prices remained sluggish, and US oil fell to the $30 level.