Senior Research Analyst at FXTM
It is
shaping up to be yet another rough and rocky trading week for the battered
Dollar as investors attack the currency at any given opportunity!
The
king of the currency markets has been kicked off the throne, weakening against
every single G10 and most emerging market currencies since the start of August.
With the Dollar falling victim to crumbling U.S. yields, uncertainty over the
latest coronavirus relief package and shaky economic fundamentals , emerging
market currencies have the potential to appreciate.
However,
the Nigerian Naira has struggled to exploit the Dollar’s decline with the local
currency trading around N474 on the parallel markets. The Naira remains
entangled in a fierce battle against Dollar shortages, COVID-19 and shaky oil prices which have limited the Central Bank of Nigeria’s capacity to
defend the local currency.
Speaking
of Oil, prices are climbing to the highest level in nearly two weeks after an
explosion at Beirut’s port fueled fears over instability in the region . WTI
Crude and Brent may push higher on geopolitical tensions, however gains may be
capped by fears over a new wave of coronavirus infections hitting fuel demand.
Everybody
is talking about Gold yet again after the precious metal smashed through the
psychological $2000 level yesterday evening. Golds explosive momentum mirrors a
train reaching full velocity with fundamentals keeping the engines running at
maximum capacity! A broadly weaker Dollar, negative U.S . yields, pre-election
jitters and rising coronavirus cases in the United States among other themes
have boosted Gold’s allure.
The
precious metal has gained almost 35% since the start of 2020 and is trading at
an all-time high above $2039 as of writing. Will bulls have enough energy to
challenge $20 5 0 and beyond by Friday or will there be a retracement back
towards the psychological $2000 level? Time will tell.
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