USD Index Bounces Above 50-dma As Global Equities Swirl

Equities sank sharply Monday, with financials and travel firms underperforming on renewed risk of lockdown measures across the UK and continental Europe as well as the release of an excoriating report on global banks, in which several high profile names were accused of processing millions of dollars of non-compliant transactions. This weighed on European and US benchmarks, which sank as much as 4.4% ahead of the close.

Weak stocks worked in favour of haven FX - boosting the greenback, JPY and CHF to the top of the G10 pile to begin the week. The strength of the USD countered adverse risk appetite to weigh on gold, which shed over $50/oz at some points, hitting the lowest level since early August.

USD/JPY traded lower throughout European hours, but this reversed into the close on a volume surge in futures, which boosted the pair into the green before the European closing bell. While liquidity may be low due to the Japanese market holiday, markets will be watching to see if the bounce sticks this week.

Datapoints are few and far between Tuesday, with only US existing home sales on the docket. The speaker schedule should be more illuminating, with Fed's Powell and Tsy Secretary Mnuchin both due to appear before the House Financial Services Panel. Text is due top be released for the Fed chair. BoE's Bailey, RBA's Debelle and ECB's Lane are also slated to speak at separate events.