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Risk sentiment left hanging in the balance

Risk sentiment left hanging in the balance

Global risk sentiment appears to be at the crossroads, unsure whether to push higher or retreat meaningfully to safer waters, with investors still sieving for clues about the coronavirus’ overall impact. Most major stock indices across Europe and Asia are in the red, although US futures are now pointing to gains when trading begins in New York later today.

It remains to be seen whether US equities can prolong its nascent bull market, having climbed by over 20 percent since March 23, as uncertainties remain over how the depressed global economic outlook would ultimately feed into corporate earnings moving forward.

dow jones daily april 9

Policy paralysis leaves Euro on slippery slope

The Euro is now weaker by about 0.4 percent against the US Dollar, with EURUSD dipping further below the psychologically-important 1.09 level. The Euro’s weakness is, in turn, allowing the Dollar index (DXY) to reclaim the 100-handle, given that the Euro carries the most weight in the DXY.

Despite holding a 16-hour teleconference, European Union finance ministers are struggling to agree on how best to support the Eurozone economy amid the coronavirus-induced crisis. Such indecision is set to erode investors’ confidence that the bloc can be adequately supported, with the EU now on the brink of facing its deepest recession in its history. Unless concerted government support measures can be rolled out soon, markets may be willing to allow the Euro to explore more of its downside versus the Greenback amid the glaring policy uncertainties.

Policy paralysis leaves Euro on slippery slope

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

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