ZFX: News shocked the markets! Dollar index dropped to 93 level below

Investors were cautious in Asian and early European session on Friday after the record-setting figures of the US GDP in the second quarter, showing that the US economy has contracted severely. The data showed a drop of 32.9% (annualized) in the second quarter.

The second wave of the coronavirus outbreak in the US is still at the peak level. Investors worried that it is not that possible to achieve quick recovery.

Globally, the report now is showing that more than 17.2 million cases have been confirmed, with more than 670000 deaths.

Gold price on Friday is trading at the relative high level, approaching $2000 mark. Worries over the US economy and the China-US tensions drive investors towards the safe-haven metal.

However, the greenback didn’t get any support under risk aversion. The dollar index broke 93 level on Thursday, and dropped to a further low of 92.55 on Friday, a low since May 2018. It is believed that the political uncertainty hurt the attractiveness of dollar after President Trump suggested to delay the presidential election.

Besides the gloomy GDP figures, the US Labor Department data also showed a sign of the weak recovery in the employment market. The initial claims for unemployment benefits last week recorded 1.434 million.

ZFX analyst Jacob Leung said that, the new negative factors may put the dollar under pressure, extending the recent weakness. However, it should be noted that the momentum of the FX market and the gold market have changed. Strategy adjustment is needed to avoid false breakouts and fluctuations.