America Clings To Stimulus Hope

October 13, 2020

Greenback Awaits Corporate Earnings

The US index saw little change at the start of the trading week as it closed 0.03% lower on Monday.

Investors are reacting to the deadlock to impose further stimulus before the Presidential Election. The White House, House of Representatives, and Senate have all disagreed on the amount of funding.

As a Biden victory looks more likely, this could spur on the dollar as it would sharply raise the probability of a fiscal package being agreed upon.

As the corporate earnings season beings, the greenback will be looking for some positivity from some of the largest publicly traded companies.

ECB Pushes to Keep Up Fiscal Support

The euro finished indecisively yesterday, after Germany’s Wholesale Price Index for September failed to impress.

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As the eurozone’s largest economy shows signs of waning, investors have remained cautious. This comes as the COVID-19 infection rate continues to rise throughout much of Europe.

In addition, ECB President Lagarde has also continued to call for governments to prolong fiscal support.

Bank of England Hints to Negative Territory

The pound edged higher for its fourth consecutive day as it closed 0.30% up on Monday.

This comes despite fresh lockdown measures in the UK. Boris Johnson yesterday revealed a three-tier system to help limit the spread of the coronavirus.

Meanwhile, concerns for the British economy have risen after the BoE hinted at lowering interest rates into negative territory.

This follows reports that the Bank had emailed various other banks requesting information about how prepared they were for negative interest rates.

Earnings Launch to Support Equities?

The US indices booked a fourth straight gain ahead of the earnings kick-off.

The tech-heavy Nasdaq rose by 2.2%, whilst the S&P climbed higher at 1.6%. Apple was the main driver of the indices with gains of 6.4% ahead of launching its new slate of iPhones today.

In addition, the likelihood of a Joe Biden landslide has also boosted sentiment. This has helped calm the market’s nerves over the potential for a contested result.

Gold Remains Upbeat

After a convincing close to last week, the yellow metal could not keep up gains as it closed 0.36% lower yesterday.

The decline led away from a three-week top as COVID-19 updates remain in the mind of risk appetite. The delay in the coronavirus stimulus could shift sentiment as traders now look towards the next rearranged Presidential debate.

Triple Whammy For Oil

Oil ended the session 2.2% lower on Monday as it failed to remain above the $40 handle.

Prices were under pressure from concerns about the return of supplies.

With workers returning to the US Gulf of Mexico, platforms after Hurricane Delta, and Norwegian workers returning to rigs after ending a strike, all eyes were on Libya.

The African state has restarted production at its largest field, as peace talks are ongoing.

By Orbex