Daily Outlook

Silver and euro gleaming as investor bets on economic recovery hurt dollar

The euro stood at an 18-month high, silver soared and commodities rose on Wednesday, benefiting from hopes that key parts of the global economy are heading in the right direction which also hurt the U.S. dollar. But stock markets, which have surged this month, moved mostly sideways in Asia, except in Australia where a jump in coronavirus infections pushed the main index 1.3% lower.

S&P 500 futures were flat following a mixed session on Wall Street, with economic optimism running into concern about rising coronavirus cases. The focus has also turned to political disagreement over the next U.S. rescue package.

German DAX futures, Euro STOXX 50 futures and FTSE futures were down about 0.3%, pointing to a steady open after gains on Tuesday in the wake of European Union leaders striking a deal for a region-wide rescue plan.

The euro’s rally gathered steam on that agreement, a huge step toward both recovery and a stronger union, busting through resistance at $1.15 as the dollar faltered.

The common currency hit $1.1547 on Wednesday, its best since January 2019, and the greenback capitulated against the Australian dollar too, which held at a year-high $0.7144 and was bolstered by positive retail sales data.

In sum, bets against the dollar are nearing a two-year peak touched a month ago and investors are net long on all of the G10 currencies against the dollar, save the pound and the Canadian dollar, U.S. Commodity Futures Trading Commission data shows.

Precious metals soared as real bond yields have added to their lustre of precious metals at the same time as industrial demand has put a rocket under prices.

Spot silver rose 5% to a six-year high on Wednesday and is up more than 15% for the week. Gold marked a fresh nine-year high of $1,865.35.

Japan’s Nikkei dipped 0.6%. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.1% to retreat from a five-month top made on Tuesday. Oil prices remain rangebound, hurt by inventory concerns. Brent futures slipped 0.4% to $44.14 per barrel and U.S. crude fell 0.5% to $41.70 a barrel.

Silver and euro gleaming as investor bets on economic recovery hurt dollar, Reuters, Jul 22

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