Morning Brief: Dollar Index (DXY) struggles amid NZDUSD and DAX recovery

Global stocks are mixed in early trading as investors concerns grow over stalled stimulus talks in Washington. In Asia, the Hang Seng and Shanghai Composite rose by 1.05% and 2.70%, respectively while the Nikkei 225 index declined by 0.55%. In Europe, futures tied to the DAX index and FTSE 100 are up by 0.35% while those tied to the CAC 40 remain unchanged.

NZDUSD rises after New Zealand postpones elections

The NZDUSD pair edged up slightly as investors reacted to news that New Zealand has postponed its upcoming parliamentary election by four weeks. The statement came a days after the country confirmed several new Coronavirus cases in its capital city Auckland.

In response to the new outbreak, the government introduced strict level three lockdown measures. The decision to change the election date came a week after the Reserve Bank of New Zealand left interest rate unchanged. The daily chart below shows that the NZDUSD pair had been in a downward trend after peaking at 0.6715 on July 31. It is also slightly above the 78.6% Fibonacci retracement level of 0.6484.

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NZDUSD gains slightly

NZDUSD

DAX index attempts to recover

Futures tied to the DAX index are up by 0.35% during the Asian session. It is the first day since Wednesday that the index is in the green. While there is no major catalyst moving the DAX index higher today, analysts cite the gains to news that Italian businesses have reported a better rebound than what most analysts were expected.

According to British financial daily Financial Times, many businesses in the country have started a recovery phase. The DAX index is also reacting to news that IG Metall was proposing a four-day working week with the goal of saving thousands of jobs. The DAX index is trading at €12,885, which is slightly better than Friday’s close of €12,775.

DAX index is in the green today

DAX Index

US dollar index (DXY) still in the red

The US dollar index (DXY) is in its fourth consecutive day in the red as investors reacted to a delay in the review of the China-U.S. trade pact. This implied that the trade deal that was signed between the two countries will remain intact in the near term. Still, there are other risks for the US dollar, including the deadlock about a new stimulus deal and the new political tensions ahead of the upcoming election.

The daily chart shows that the US dollar index (DXY) has been in the red since Wednesday last week.

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US dollar index forecast

US dollar index

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