Risk-off mood drives stocks lower, dollar higher

Expanding Covid-19 cases and tighter restrictions in Europe and Hong Kong fueled investor concerns overnight. The risk-off sentiment led to selling of Asian and European stocks, and a lower open in the S&P 500. Safe havens – US dollar and US Treasuries – rallied, and gold and oil are lower. The UK pound fell after Prime Minister Johnson said the country’s third lockdown could last until the summer. The euro softened after the European Central Bank warned that the EU may suffer a double-dip recession, and after odds increased for an earlier-than-expected election in Italy.

“A wise man changes his mind, a fool never will.” 

Spanish Proverb
  • FX Rates
    January 22, 2021

    Rates are not real time. Rates are today's indicative mid-market rates as of time of publishing, which may vary. Please contact SVB for a current quote.


  • USD

    The US dollar made gains across the board overnight, as investors shifted to a risk-off sentiment to end the week. Even so, the US Dollar Index may end lower on the week. The S&P 500 opened slightly lower on the back of investor pessimism which started in Asian and European markets. Traders await US Existing Home Sales data to be released this morning.

    GBP

    The UK pound dropped 0.7% overnight, its first fall in four days, after release of UK Retail Sales for December and PMI data for January, which was worse than expected. Also, PM Boris Johnson commented that the current national lockdown may last into the summer.

    EUR

    The euro is little changed overnight as negative Covid-19 news was offset by upbeat German PMI data for January that exceeded expectations.

    CAD

    The Canadian dollar fell nearly 0.7%. against the dollar. The currency looks set for its first down day in four amid lower oil prices and broad US dollar strength.

    ASIA/PACIFIC

    Asian currencies are all lower following news that Hong Kong’s Covid-19 cases have expanded, which has brought about its first lockdown, to begin this weekend. In general, Asian assets and currencies have been in demand on the back of optimism that President Biden’s fiscal stimulus will drive global growth and trade higher.

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Scott Petruska, CFA
WRITTEN BY
Scott Petruska, CFA

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