Traders sold riskier assets on signs that a second wave of the pandemic is emerging in parts of the United States and China, dousing investor hopes of a quick economic rebound.
Beijing closed the city’s largest fruit and vegetable supply center and locked down nearby housing districts after dozens of people associated with the market tested positive for the virus. A record number of new infections and hospitalizations were reported in more US states, including Florida and Texas, over the weekend.
In FX, the greenback erased all its intraday gains and turned lower against other major currencies, with commodity-linked currencies such as AUD and NZD leading the reversal. The EURUSD pair returned toward the 1.13 threshold.
Oil remained near daily lows, and the WTI benchmark was seen at around 35.00 USD, reflecting a turnaround in the risk sentiment.
It will be interesting to watch if the rally in stocks will continue, fueled mainly by the money printing and the recovery hopes, or we will see another large leg lower.