Quiet markets among uncertain backdrop

It’s a rather mixed market in this afternoon’s session which is perhaps to be expected ahead of the huge risk event next week across the pond. After yesterday’s deep selloff in risk assets yesterday, stocks are a touch softer today, bonds are firmer and there’s a bid for JPY, which we looked at this morning.

The Dollar is modestly weaker against its G10 peers while the ‘commodollars’ are better bid. With stimulus talks on the backburner, the incumbent is not seeing any late surge in polling support that propelled him into the Oval Office this time four years ago. A contested outcome nags at the back of many minds but Joe Biden is still out in front in both national polls and more importantly, the swing states which will determine the next commander-in-chief.

More immediately, the pandemic is occupying the market and the tough winter months ahead, especially in Europe. Volatility is creeping higher and the risk environment remains delicate, even if we know the prospects for fiscal relief are very high after the election .We’ve had mixed news on the data front to add to this uncertainty with US consumer confidence disappointing, while durable goods figures continue to show improvements in business investments with the headline figures rising for the fifth straight month.

Gold coiling, waiting for catalyst

The yellow metal continues to struggle for direction, trading in a tight range over the past few weeks. Last weeks move higher was capped by the previous high at $1933 but prices remain well supported by the 100-day Moving Average now just below $1900 and the six-month uptrend support line.

With momentum indicators firmly in neutral mode, we await the trigger for a break. What we know for certain is that the more prices trade in a tight range and contract, the more the breakout will be expansive!