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After more than a week of teasing, the enduring tech rally finally lifted the S&P 500 into record territory as investors remain undeterred about stock market concentrations or COVID-19 flashpoints around the world.

US equities were stronger overnight – the S&P rose by 0.2% and set a new intraday and closing high. At the close, the S&P was at 3389.78 compared to its previous closing high of 3386.15 set on 19 February. So, I guess the high print offered some level of excitement during the dog days of summer.

Given the immense issues of where the real economy sits as families struggle to put food on the table and fill up their cars with gas, not to mention we are nowhere near restoring pandemic economic losses as we are still adding those costs up.

This towering feat has to be the most curious outcome ever witnessed in the annals of global markets.

Gold shines anew

Gold fortunes look very much aligned to the direction of the US dollar as both assets reflect the same dour economic narrative that will require increases in US government deficits and enhanced efforts by the Federal Reserve to monetize all that debt.

Indeed, the duelling US deficits are the harbinger of doom for the dollar while heralding in the goddess of gold.

FX traders have turned the dial to the “dollar-off” mode, which supports gold although the rally was pared in the US session, possibly due to better than expected US economic data.

This week we have probably seen many more new entrants into space on the back of the “Buffet Bandwagon Bounce.” This week’s rally was in no small part supported by news of Berkshire Hathaway buying a stake in significant gold miner Barrick Gold.

Mr Buffett’s entrance into the gold arena may attract a new type of investor, who had previously been suspicious of bullion.

US dollar remains under pressure

The markets have flipped the switch to complete dollar off mode. The USD’s weakness, which sees EURUSD back challenging the year-to-date high and gold back above USD2,000 for example, comes with no real melodrama in equity markets.

On the macro front, traders have been unable to look past this week’s drop in the August Empire Report, which compliments the bearish US dollar narrative in the sense that the decline in sentiment is the apparent by-product of the rise in the US COVID-19 cases and could temper the US recovery.

You know when the dollar is becoming scorned when the EURUSD remains supported even when Germany reports the highest number of new COVID-19 cases in close to four months. Spain and Italy recently reintroduced some new containment measures, while Bloomberg reports that the Netherlands, Ireland, and Austria are also likely to tighten controls imminently.

It takes two to tango – Asia FX

USDCNH is ignoring US-China frictions perhaps deferring to the US election polls where the Democratic challenger is holding a substantial lead over Trump.

The Yuan is benefiting from stock market inflows, gradually improving economic conditions, a bit more policy accommodation, and the overall weak US dollar narrative.

The Ringgit benefits from similar tendencies as the Yuan by proxy correlations, and as global risk sentiment remains in the right spot.

So, with US yields falling again, MGS could be in demand as the hunt for real returns continues. Also supporting that notion is tepid inflation leaves the door wide open for the BNM to cut interest rates again sooner than later.

International markets analysis and insights from Stephen Innes, Chief Global Market Strategist at AxiCorp