Sign up to create alerts for Instruments,
Economic Events and content by followed authors
Free Sign Up Already have an account? Sign In
Vahid Bh
Oct 05, 2020 6:44AM ET
thanks for your logical sentiment
0
0
Quotes
All Instrument Types
- All Instrument Types
- Indices
- Equities
- ETFs
- Funds
- Commodities
- Currencies
- Crypto
- Bonds
- Certificates
Please try another search
Free Webinar - Decode the market's secrets! | Tuesday, May 30, 2023 | 01:00PM EDT Enroll Now
Stimulus Hope Reverses FX And Equities Trump Losses
www.investing.com/analysis/stimulus-hope-reverses-fx-and-equity-trump-losses-200539783
Stimulus Hope Reverses FX And Equities Trump Losses
By Kathy Lien | Oct 02, 2020 04:18PM ET In our last note, we talked about all of the reasons why this October could be a spooky one for the markets. This morning’s curveball is an example of the surprises that could be in store this month. President Donald Trump and the First Lady tested positive for coronavirus, sending stocks sharply lower. The Dow Jones Industrial Average plunged 400 points at the open, driving currencies down with it. However, stocks recovered by the end of the day as investors shrugged off Trump’s positive coronavirus test. Now, it's just a waiting game to see if the Trumps’ symptoms are mild or severe. There have been a number of reports indicating that he is currently symptomatic with cold-like symptoms. Come Tuesday, if they remain relatively healthy, the rally in stocks should resume as this reaffirms Trump’s laissez-faire attitude towards the virus. Chances are he’ll also uses a swift recovery to energize his base. The big October surprise would be if he becomes extremely ill, which would complicate the upcoming election significantly.
The September nonfarm payrolls report was weaker than expected with only 661,000 jobs created last month, down from 1.371 million. Average hourly earnings growth slowed to 0.1% from 0.3%, but the unemployment rate dropped to 7.9% from 8.4%, a drastic improvement that exceeded the 8.2% estimate. This was clearly enough to satisfy FX traders as they did not sell the dollar after the jobs report. USD/JPY fell only a few pips before settling higher, while EUR/USD rallied briefly above 1.1730 before giving up those gains. The greenback ended the day higher against all of the major currencies except for sterling and the Japanese Yen. It says a lot that currencies were generally unaffected by what is typically one of the most important pieces of U.S. data. The only reason why this is happening is because there’s more people seeing the glass half full than empty. They see the constant dialogue between House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin as signs that a new coronavirus stimulus deal can be achieved. However, according to Pelosi, while an agreement can be reached, it may not happen until after the election. In the week ahead, nothing matters more to equity and currency traders than stimulus headlines and updates on the health of the Trumps.
The best performing currency on Friday was sterling. There have been many conflicting headlines on Brexit and that remains the case despite today’s rally. The UK’s Brexit negotiator thinks they have an outline to an agreement, but the EU’s negotiator Michel Barnier said serious divergences persists. So far, all of the positive headlines have come out of the UK as the EU has been more dubious of the progress being made. We are as well and don’t believe that a deal is in as close reach as the UK suggests. Between the rise in virus cases and the possibility of BoE easing later this year, it's hard to be a sterling bull.
The same is true for the euro, as Madrid returned to lockdown on Friday. Capacity for restaurants, gyms and shops are reduced by half with closes at 11 p.m. instead of 1 a.m. This is a big deal because Madrid is the economic center of Spain. New restrictions are also on their way for Paris after the city was placed on maximum COVID-19 alert level. This could include complete closure of bars and restaurants, which has already happened in Marseille and Aix. Details are expected this weekend. Regardless of which way you look at this, the outlook for the Eurozone economy is grim. If the second wave is not contained quickly, the recovery will slow dramatically. EUR/USD spent most of the week trading above 1.17 but is likely to move lower in the weeks ahead.
The Australian and New Zealand dollars finally snapped back after a multi-day rally, while the Canadian dollar remained unchanged. Australian retail sales fell slightly less than expected while New Zealand consumer confidence declined modestly. Despite today’s declines, we expect the AUD and NZD to continue to outperform as they ease rather than increase virus restrictions.
Related Articles
EUR/USD Holds Above 1.0700 in Low-Volume Session
By Alex Boltyan - May 30, 2023
The EUR/USD pair continued to edge lower on Monday, although trading ranges are minimal given the holiday in the United States and Europe. At the time of writing, the EUR/USD pair...
Aussie Unchanged Ahead of Lowe, CPI
By Kenny Fisher - May 30, 2023
RBA testifies before a Senate Committee Australia releases CPI US debt ceiling deal likely to be approved by Congress The Australian dollar is drifting lower on Tuesday. AUD/USD is...
EUR/USD Turns Green but Not Bullish Yet
By Trading Point - May 29, 2023
EURUSD switched to recovery mode after its bearish wave from a one-year high stabilized around a two-month low of 1.0700 on Friday. Interestingly, the 61.8% Fibonacci retracement...
Stimulus Hope Reverses FX And Equities Trump Losses
Comments (14)
Derell Badon
Oct 04, 2020 11:31PM ET
Great information
0
0
BAJU Forex EST
Oct 04, 2020 7:56AM ET
Thanks madam, I can now draw a conclusion from your statement, I see UJ as best option for sellers,
0
0
Raghu Bhupasamudram
Oct 04, 2020 12:09AM ET
thanks a lot
0
0
Stinlee Juponis
Oct 03, 2020 7:26PM ET
you made it clearly to me Kat..Thanks a lot
0
0
sherif ahmed
Oct 03, 2020 12:19PM ET
Thank you Ms.lien for your opinion, but do you think gold is going to rise in the next days ?
4
1
Jose Jaen
Oct 03, 2020 9:15AM ET
Thank you Ms. Lien for your outstanding articles. From Jose Jaen in #nyc. Stay Safe and Healthy. May God and the Universe Always Look Over You.
0
0
ChrisBlackforex
Oct 02, 2020 5:51PM ET
Tjanl you Kay!
0
1
Waleed Attia
Oct 02, 2020 5:49PM ET
very good...as usual :-)
0
0
Jack Galloway
Oct 02, 2020 5:18PM ET
Kathy!
0
1
Add Chart to Comment
Confirm Block
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
Report this comment
I feel that this comment is:
Comment flagged
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.