A fresh batch of gloomy economic data and investors’ fears about sharp spikes in new coronavirus infections outshined a strong quarterly rebound.
Markets have been torn between in the past trading days between some positive economic developments and a seemingly resurgent pandemic.
WHO chief Tedros Adhanom Ghebreyesus said on Monday the pandemic is not even close to being over. California and Texas saw record rises in new infections on Monday.
Further, the U.S. Federal Reserve Chair warned that the outlook for the world’s biggest economy was “extraordinarily uncertain. Investors will focus on testimony by the U.S. Fed and Treasury Secretary later in the day for hints on more U.S. stimulus.
Separately, UK markets took a hit from a worse-than-expected GDP reading. Britain’s Office for National Statistics said the economy shrank by 2.2% between January and March. This was its worst performance since 1979, as households slashed their spending.
Annual inflation in the Eurozone accelerated to 0.3% in June from a four-year low of 0.1% in May.
Market reaction was limited to China’s parliament passing of national security legislation for Hong Kong. Sino-U.S. tensions are heating up again with Washington beginning to eliminate Hong Kong’s special status under U.S. law. China’s parliament passed the legislation on Tuesday and the country said it would retaliate.
There is good news too. Data showed China’s factory activity expanded at a stronger pace in June as the government lifted lockdowns and stepped up investment.
START TRADINGForex – Strong quarterly rebound amid virus fears
Sentiment faltered amid fears that new COVID-19 hot spots might put the swift recovery investors are hoping for in risk. Analysts also warned of increased volatility as traders rebalance their portfolios at the end of the quarter.
The safe-haven Swiss franc slipped marginally. The dollar rose 0.1% against the franc to 0.9506.
The Australian and New Zealand dollars also edged down.
The greenback also climbed against the Japanese yen, another currency considered a safe store of value. It was last up 0.1% to 107.73 yen.
The euro lost further ground against the dollar in morning trading after underlying price pressures dropped again in the eurozone. The common currency fell as low as $1.1199, losing close to 0.4%, before picking up slightly towards midday.
Sterling traded at $1.2280 after sliding to a one-month low of $1.2252 on Monday. Concerns about how Britain’s government would pay for its planned infrastructure programme added to worries about its ability to seal a trade deal with the EU.
In commodity markets, oil prices steadied as investors looked for signs of an economic recovery in the second half of 2020.
U.S. crude was down 0.6% at $39.15 a barrel, having hit as low as $39.00. Brent crude slipped 0.6% to $41.16 per barrel.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money