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Dumping U.S. Dollars Before The Election

By Kathy LienForexOct 27, 2020 09:59PM ET
www.investing.com/analysis/dumping-us-dollars-before-the-election-200542573
Dumping U.S. Dollars Before The Election
By Kathy Lien   |  Oct 27, 2020 09:59PM ET
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Investors are dumping U.S. dollars ahead of next Tuesday’s U.S. Presidential election. This will be a historic event for the country, the world and the financial markets. The stakes are high and the outcome is uncertain. There’s a very good chance that the next president of the United States won’t be decided on Nov. 3, which explains why investors are compelled to reduce exposure and cut positions ahead of the election, especially after record-breaking gains in stocks this year.
 
A flurry of U.S. economic reports were released today – none of which lent much support to the greenback. USD/JPY was on a one-way decline in the New York session, falling within a few pips of its one-month low. Durable goods orders rose strongly in the month of October and house prices increased. Unlike the University of Michigan sentiment index, which hit a six-month high, the Conference Board reported a decline in sentiment in the month of October. The biggest news today was the confirmation of Judge Amy Coney Barrett to the Supreme Court, which could reshape the court for the next decade and play a major role in how mail-in ballots are counted. Republicans are pushing for a reconsideration of the Pennsylvania mail-in voting case, which is important for the markets because it could affect election results.
 
The broad-based move out of U.S. dollars is the only reason why EUR/USD is still above 1.18. Daily coronavirus cases in Italy hit a new record high today and, while cases in France and Spain are lower, the recent surge has both countries considering more restrictions. The French government will be holding meetings this week to determine what type of response is needed for this “brutal second wave.” There are reports that they are considering full lockdown for Paris, Lyon and Marseille. This may be inevitable, as we saw how Australia was able to beat its second wave by putting the Victoria region in a two-month-long lockdown. We don’t expect measures this drastic in Europe, as they are reluctant to sacrifice their economies, but a shorter lockdown could be possible. The European Central Bank meets on Thursday and, given recent developments, it will have no choice but to set the stage for further easing this year.
 
The Bank of Canada is not expected to change monetary policy on Wednesday. At its last meeting in September, the BoC was upbeat. It said the economy is recovering as expected. However, it felt that ongoing policy accommodation was needed to support a protracted and uneven recuperation. Data hasn’t been great since then, with retail sales growth slowing and consumer prices falling another month. Job growth was very strong, but the IVEY PMI index was much weaker. In light of rising domestic virus cases and the raging pandemic abroad, the BoC is likely to sound more cautious. The best-performing currency today was the New Zealand dollar, which shrugged off weaker trade data, but the Australian dollar will be in focus tonight with CPI data scheduled for release. AUD is up, but weaker CPI data could set the stage for RBA dovishness next month. 
Dumping U.S. Dollars Before The Election
 

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Dumping U.S. Dollars Before The Election

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Comments (20)
Paul Shimel
Paul Shimel Oct 29, 2020 1:25PM ET
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Interesting to see the dollar over 94 today just two days after your article. I guess your tea leaves are acting up.
David Paul
David Paul Oct 29, 2020 4:21AM ET
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let not place high speculation and outlook , channel the energy to the outcome :) Hopefully either which way a positive end for traders
Robert Hakker
Robert Hakker Oct 28, 2020 8:19AM ET
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JPY is one of the only majors rising.  Look at the rest.  DXY has bounced for a week. Oh!  Wait! Mrs. Lien is one of those COVID people - when no one is dying, everyone is dying.
apc apc
apc apc Oct 27, 2020 9:40PM ET
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lockdown. what waves? just the same cold
apc apc
apc apc Oct 27, 2020 9:39PM ET
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Australia ..melbourbewaa in 6 month globalist communist
Michael Wln
MichaelW Oct 27, 2020 9:39PM ET
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Victoria's lockdown (lockdown #2) was closer to 4 months, and there are still severe restrictions in place. All because the State Government made a mess of the hotel quarantining for returned travellers. But there are still underlying problems in some parts of the community.  All the other Australian States and territories got their act in order and haven't had "second waves". Hopefully, they have a good summer "down under" as warmer weather returns.
Wayne Ng
Wayne Ng Oct 27, 2020 9:36PM ET
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Also pointing 1.35
Murali Brahmandam
Murali Brahmandam Oct 27, 2020 8:52PM ET
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euro pointing towards 1.04
John Raymond
John Raymond Oct 27, 2020 8:30PM ET
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euro is below key 1.18!
Chris Black
ChrisBlackforex Oct 27, 2020 6:59PM ET
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Thanks$!!
Andy Huang
Andy Huang Oct 27, 2020 6:58PM ET
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Opposite is playing out. Like back in March, the uncertainty and risk off pre election is providing support for greenback. Dollar rising as of this writing.
Olaniyi Ayinla
Olaniyi Ayinla Oct 27, 2020 6:49PM ET
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Thanks
Max Joseph
Max Joseph Oct 27, 2020 6:34PM ET
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yep, in fact EUR/USD is losing and the graph says sell... good analysis!
Tyler Phillis
Tyler Phillis Oct 27, 2020 6:34PM ET
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If the dollar were weak the EUR/USD would be heading up.
Ronald Sanks
Ronald Sanks Oct 27, 2020 6:31PM ET
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that's her Fantansy
Cosmus Okonti
Cosmus Okonti Oct 27, 2020 6:26PM ET
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thanks for your information
Inablink Solutions
Inablink Solutions Oct 27, 2020 6:02PM ET
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i've been trading against the USD and I'll say its holding strong. i'm curious to know why the usd is strong while every analyst is wrong.
Tim Richter
Tim Richter Oct 27, 2020 6:00PM ET
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time to put on your deflation helmet and ride the dollar up
Jalen Butts
Jalen Butts Oct 27, 2020 5:58PM ET
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Clearly said uncertainty which people pulls money out off market + no stimulus . DEFLATIONARY
Thunder Flash
Thunder Flash Oct 27, 2020 5:57PM ET
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How come USD is rising now
Audrey Rub
Audrey Rub Oct 27, 2020 5:52PM ET
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Lol, why the EURUSD is heading south then?
trinh dao
trinh dao Oct 27, 2020 5:07PM ET
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Thank you
 
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