A wave of risk-off sentiment swept through the global financial markets after US President Donald Trump tweeted that he and First Lady Melania Trump have both tested positive for Covid-19 and will begin their quarantine and recovery process. US and European equity futures, along with Asian benchmark indices, all sank on the news. The safe haven Japanese Yen surged by as much as 0.68 percent to hit its strongest level in over a week against the US Dollar, dragging the Dollar index (DXY) back below the 94.0 level.

This surge in political uncertainty comes just a month before the November 3rd Presidential Elections, adding to the plethora of concerns that investors are already contending with. This could potentially weigh on the political will to reach an agreement over the next round of US fiscal stimulus, while pushing the Trump administration’s handling of the pandemic front and centre on the election campaign.

Given this added layer of uncertainty, a growing sense of risk aversion could dominate market sentiment, until there is further clarity about the President’s health response to the coronavirus.

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