After extending gains yesterday on renewed appetite for risk, investors pared back from global equity markets as uncertainty surrounding the situation in Ukraine crept to the forefront. European benchmark indices traded under pressure throughout the majority of the session with the DAX trailing significantly lower after the release of a weaker than expected ZEW expectations survey, which fell to 8.6 in August against expectations of 17.0.
The euro declined for a second session on the weaker German data, with intraday dips testing recent lows towards 1.3336 against the dollar early on. The single currency has shed 2.6% against the dollar since the start of the second half of the year as a combination of concerns regarding European growth, the impact of Russian sanctions on European trade, and a steadily improving US economy prompt investors to sell euros in favour of the USD. The dollar index rallied towards 81.676 today on before giving up the early gains, last trading 0.12% higher towards 81.569 at the end of the European session.
Spot gold prices rallied higher after closing lower on Monday with prices rallying 0.7% higher to end the European session just below $1,316/oz. Investors will continue to assess the situation between Russia and Ukraine but with the lack of significant macro data short term investors have been prompted to take profits off the table. Trading activity is expected to remain quiet in the run up to the release of the Fed Budget later this evening and with US retail sales for July expected tomorrow, longer term investors may be provided with the necessary catalyst to spur markets higher.