The euro remains high as investors bet that the recovery hinders the dollar and stocks build up

By Tom Westbrook and Elizabeth Dilts Marshall

SINGAPORE / NEW YORK (Reuters) – The euro remained at its highest point in 18 months, silver soared and commodities advanced on Wednesday as hopes of economic recovery pushed up bets on a recovery in global demand and the fall of the US dollar.

Stock markets in Asia rose further, except in Australia, where an increase in coronavirus infections put pressure on banking and travel stocks and the benchmark index () fell 1%. S&P 500 () stock futures advanced 0.4% in line with the relatively positive mood.

The recovery of the euro () was brought about by the leaders of the European Union who reached an agreement for a rescue plan throughout the region, a big step towards recovery and a stronger union.

The common currency rose to $ 1.1543, its best level since January 2019, as investors bet that an economic rally would benefit currencies in addition to the dollar as world exports rebound and trade improves.

“Overall, sentiments are improving,” said Vishnu Varathan, chief financial officer at Mizuho Bank in Singapore.

“That afterburner was given to the euro, and it’s also true for him … he went bankrupt once the dollar began to crumble.”

The Australian Dollar It hit a more than a year high of $ 0.7144 on Wednesday and was bolstered by strong national retail sales data.

Bellwether three months it held close to two-year peaks and iron ore prices opened further, ignoring increased production in Brazil and a cautious outlook from global miner BHP.

Falling yields on real bonds have added to the shine of precious metals, while industrial demand has ripped silver. Spot prices for the metal, used in solar systems, it was up 5% on Wednesday and up 15% during the week.

Gold It also hit a new nine-year high of $ 1,865.35.

“The silver-gold price ratio is still well below the long-term average,” said commodity analyst at the Commonwealth Bank of Australia (OTC 🙂 Vivek Dhar.

“We believe that means that a sustained recovery in silver can continue, particularly when demand expectations and supply concerns add to the mix.”

CLIFF CONCERNS

Elsewhere there was a cover on optimism. The spread of the coronavirus in the United States and other hotspots such as India, Latin America, Tokyo, and Melbourne accelerated and signs abound that economic recovery is far from assured in the short term.

The activity of the Japanese factory contracted for the 15th consecutive month in July.

Economists expect trade-sensitive South Korea to post its worst economic contraction in 20 years when second-quarter GDP data is released on Thursday.

MSCI’s broader Asia-Pacific index of stocks outside of Japan () rose 0.2% to just below a five-month high reached on Tuesday. Japan Nikkei () down 0.2%

The United States also reported more than 1,000 deaths from COVID-19 on Tuesday, the first time the grim milestone was passed since June, and President Donald Trump warned that things are likely to get worse before they get better.

Republicans and Democrats disagree about the size of the next tax relief package as the month-end “tax cliff” deadline for extending unemployment insurance approaches.

“It remains to be seen whether Republicans and Democrats have the same determination shown by EU leaders to find a middle ground next week,” DBS analysts in Singapore said in a note.

“This concern was evident in American actions.”

On Wall Street overnight, the benchmark S&P 500 () hit positive territory during the year so far, but struggled to move up and closed 0.16% higher.

The Dow () was up 0.6%, and the Nasdaq () was down 0.8%, as investors sold a spectacular tech rally that has increased the Titans Apple (NASDAQ :), Amazon (NASDAQ :), Microsoft (NASDAQ 🙂 and Alphabet (NASDAQ 🙂 so much so that their market value exceeds that of all Japan stocks combined.

Oil prices remain within range, but they held on to most of their gains overnight. Brent () futures fell 0.5% to $ 44.12 per barrel and fell 0.5% to $ 41.70 per barrel.