The G20 summit took place in Bali, Indonesia, on November 2022…
Bad days for the greenback
Information is not investment advice
The USD is trading at its 7-week low, and it looks like it will continue falling further. If we just look at the major pairs like EUR/USD, GBP/USD, and USD/JPY, we will notice that technical analysis stands for the continuation of the US dollar’s weakness.
For example, there is the weekly EUR/USD chart below. It has nicely bounced off the key level of 1.1600, which it has failed to cross already in previous years. It was a natural sell-off after the breakout of the significant resistance, which turned into the support level now. So, we can assume that the pair will stick to its uptrend further.
However, some analysts believe that the euro is undeservingly strong as the Eurozone reported a record number of new infections. Elsewhere, European PMI reports came out mixed today: the Manufacturing report beat estimates, while the Services one came out worse than the forecasts. Indeed, coronavirus hit mostly the service sector.
Let’s discuss the USD from the fundamental side now. One of its main drivers now is fiscal stimulus. House Speaker Nancy Pelosi claimed some progress in talks, signaling that the stimulus package will be delivered soon. However, Republicans aren’t so optimistic, they consider that the relief package won’t be imposed until after the election. That drove safe-haven assets up, especially the Japanese yen.
Anyway, the presidential election is getting closer, and national polls point to Biden’s victory. However, the last word will be after the Electoral College. Actually, the last time Trump took the minority in national polls as well, but in the end, he won.
There is a consensus on the market, that if Biden wins, the USD will drop, while stocks will be boosted. Why? His victory will reduce the market uncertainty and Democrats can unveil the larger stimulus package, which will support investor’s confidence. As a result, riskier assets like stocks will be in high demand.
According to BK Asset Management, the US dollar will stay weak ahead of November 3 vote, “the near possibility that we’re going to get more bad news or at least no good news from now to the election is driving investors out of the greenback”.
Follow further news about stimulus talks and the election to keep up with the market trends!
The deafening news shocked the whole world yesterday: the British Queen Elizabeth II died peacefully at the age of 96…
After months of pressure from the White House, Saudi Arabia relented and agreed with other OPEC+ members to increase production.
On Thursday, the 2nd of February, the Bank of England will publish its report concerning interest rates and inflation data for the Eurozone. Professionals and investors anticipate that Andrew Bailey’s lead team of policy makers will likely raise interest rates to 4%; the highest in over a decade, for the tenth time in a row.
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.
Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.