Stepping in the European trading session, the market sentiment is cautious as traders are all closely watching the first US presidential debate ahead. The dollar, recently as the major safe-haven asset, was just steady against the other currencies on Tuesday earlier session. Of course, the development of the new US relief bill is still uncertain, and traders are waiting for hints.
The dollar index is still trading above 94 level. Even though the dollar dropped back from the two-month high, investors were still cautious in the current “correction” stage, no matter the FX market or stock market.
Sterling outperformed other currencies on Monday due to the hopes of Brexit trade deal despite the current dilemma over the talks. BOE Governor Deputy Ramsden said that it is doubtful about the effectiveness of the negative rates policy, boosting up the Sterling up to 1.293 level.
ZFX analyst Jacob Leung said that it is a “unusual” optimism over the EU-UK deal. The major problem hasn’t been solved. The sharp rally for the pound may be just due to the unwinding of the short positions for risk management, in order to get rid of the uncertainties over the EU-UK negotiations.
The market is still looking forward to the good news from the US Congress. Speaker of the House of Representatives Pelosi said that the Democratic Party will continue to discuss with Treasury Secretary Mnuchin about the stimulus package that up to $2.4 trillion. Indeed, traders expect that it is not a “high chance”, but in the short term, somehow it is still good to such a sensitive sentiment.
While risk appetite sounds back, the dollar slipped a bit. Gold price returned to the $1880 mark area as investors seek for another haven before the “first debate”. Democrat Joe Biden and Republican Donald Trump will square off later in the day (Wednesday 0900 GMT+8). It should be alerted that any wording from Trump and Biden may spark shocks.
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