US relief package hopes sees “risk on” phase resume

Intermediate

Macroeconomic/ geopolitical developments

  • Republicans and Democrats have still been unable to come to an agreement on a new economic relief package, but hope remains, which has helped the “risk on” theme this past week.
economic relief package
  • This was despite President Trump at one point stating that a deal would NOT be done before the election.
  • The other significant geopolitical development last week President Trump leaving hospital in recovery, having previously tested positive for COVID-19.
  • This has thrown the US Presidential election into some further unrest, with the next Presidential debate now cancelled.
  • However, Joe Biden continues to show well in the polls and financial markets seem more and more at ease with a Biden victory and even for a Democrat clean sweep at the November vote.
  • A strong Biden victory would ease the threat of a difficult transition of power.
  • COVID-19 cases continue to grow at a high rate across Europe and in the U.K., as many nations have instigated new national and regional lockdown measures.
  • Despite no tangible progress between the EU and UK in their trade talks, there appears to be some improvement in the chances of a deal being done.

Global financial market developments

  • Global stock markets pushed higher through the week, with US averages leading the more positive outlook.
  • In addition, market breadth has been supportive with the small-cap Russell 2000 a strong performer from late September.
Russell 2000 chart
  • In the major Forex markets, the theme has further shifted to “risk on” with the Japanese Yen and US Dollar weakening still further against most major currencies
  • The “risk currencies”, notably the Canadian Dollar, have particularly benefited.
  • GBPUSD broke above a notable barrier at 1.3007 for a more positive tone, from hopes of a EUR-UK trade deal.
  • EURUSD has further shifted to a more positive outlook short-term.
  • In the commodity world, Oil, Copper and Gold have all rallied as the US Dollar has again weakened, again echoing the “risk on” theme.

Key this week

  • Central Bank Watch: Some Central Bank speakers through the week, but no meetings or release of minutes to note.
  • Macroeconomic data: A very quiet week on the data front too.
  • Earnings season: Earnings season kicks off in earnest this week, with the spotlight on major US banks, Johnson and Johnson, Delta Airlines, United Health and Walgreens.
DateKey Macroeconomic Events
12/10/20Nothing of note
13/10/20Chinese trade data; UK Employment report; German CPI and ZEW; US CPI
14/10/20US PPI
15/10/20Australian Employment report; US Jobless Claims
16/10/20US Retail Sales

Editor in chief

Steve Miley is the Market Chartist and has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued

Comment on this video

Your email address will not be published. Required fields are marked *


Latest Related News

Dollar Reverses Midweek

Dollar reverses (DXY forecast)Euro posts positive along with Pound  (EURUSD and GBPUSD forecasts)Kiwi holds support and Dollar-CAD close to breaking down  (NZDUSD and USDCAD forecasts) Continued

US Dollar continues to strengthen

Dollar Index break up (DXY forecast)Euro reaches first downside target (EURUSD forecast)Kiwi also hits support target (NZDUSD forecast) Continued

Sterling Soars

GBPUSD has broken the corrective channel as the 200-day moving average is surpassedThe 50-day moving average is proving harder to breakThe economy is staging a recovery; debt is manageableTaxes will rise, but the public will understand If one looks at the long chart of GBPUSD over the past nine-years, shown below in Figure 1, one can see the spot price has recently edged passed the… Continued

Higher yields globally see stocks dip, US Dollar weakness resumes

Macroeconomic/ geopolitical developments Another relatively quiet week for financial markets, with the main central bank activity from the Reserve Bank of Australia (RBA) and the Federal Open Market Committee (FOMC) releasing their prior Meeting Minutes, with minimal impact on markets.Macroeconomic data releases were on the lighter side with the global Markit Flash Manufacturing and Services PMI releases on Friday also failing to ignite financial markets.Earnings… Continued

Broad US Dollar weakness resumes

The Pound , Aussie and Kiwi have no resistance (GBPUSD, AUDUSD, NZDUSD forecasts)US Dollar-CAD threatens to breakdown (USDCAD forecast)Euro-Pound continues its descent (EURGBP forecast)  Continued

Forex Brokers in your location


SIGN UP

71% of retail investor accounts lose money when trading CFDs with this provider.


SIGN UP

67% of retail investor accounts lose money when trading CFDs with this provider.


SIGN UP

73% of retail investor accounts lose money