By Deepta Bolaky
The spotlight remained on the US Presidential election day. Despite an unprecedented health and economic crisis, the 2020 election reflects a deeply polarised nation similar to the 2016 election results. As of writing, there are a few key battleground states yet to be claimed in this tight election. Many are calling the key state of Michigan for Joe Biden but with many mail ballots yet to be counted, it is too early to call. However, winning Michigan will bring Joe Biden closer to victory.
The Trump campaign has now launched legal actions against Pennsylvania and Michigan and requested a recount in Wisconsin. It could be days before the election results are announced, but one thing for sure, the hopes of a blue wave “clean sweep” in the Senate may be unlikely and the US may face the status quo on the policy front.
Global equities rallied on Wednesday at the uncertain outcome and fears of a contested election.
In the US markets, attention was on the stimulus package and the election outcome. It is another tight election which cast doubts on the size of the government relief package. The election outcome might plunge the US economy into another period of great uncertainty which prompted traders to pile into Treasuries.
Another day of gains on Wall Street where all major US equity indices rallied above 1% or more on Wednesday.
In the FX space, major currencies were stronger against the US dollar following the rally in the equity markets. Given the tight election results and the prospects of a contested election, major pairs remained in familiar levels.
The British Pound emerged as the worst-performing G10 currencies against the US dollar dragged by negative Brexit headlines and speculations about the BoE swirling about negative interest rates. The GBPUSD pair dropped from a high of 1.31 level to a low around the 1.29 level.
Source: GIT MT4
Crude oil prices posted modest gains on the back of the improvement in risk sentiment and bullish API and EIA reports despite the ongoing uncertainty on the demand side. EIA’s crude oil stocks change came in at -7.998M, below expectations (0.89M) on October 30. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading at around $38.96 and $41.23 respectively.
In a volatile trading session, the precious metal held above the $1,900 level lifted by a weaker US dollar. As of writing, the XAUUSD pair is trading around $1,904. The timing and size of the US stimulus package remain the focal point for gold traders.
Source: GO MT4
By Deepta Bolaky
Key upcoming events
|Friday, 06 November 2020
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