Dollar can’t catch a break; Gold shines - FXTM
Written on 05/08/2020 6:20 GMT by Lukman Otunuga, 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 $2050 and beyond by Friday or will there be a retracement back towards the psychological $2000 level? Time will tell.
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