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Dollar holds gains as U.S. economic doubts grow By Reuters



© Reuters. FILE PHOTO: FILE PHOTO: George Washington is seen with printed medical mask on the one Dollar banknote in this illustration taken

By Stanley White

TOKYO (Reuters) – The dollar held onto gains against most currencies on Wednesday after Republican U.S. President Donald Trump’s abrupt cancelling of talks on economic stimulus with Democrats increased risk aversion.

Currencies had only just regained a sense of calm after Trump returned to the White House from hospital, where he received treatment for the coronavirus.

Trump’s surprise decision to call off stimulus talks until after the Nov. 3 presidential election increases downside risks for an already shaky U.S. economy, which is likely to favour safe harbour flows into the dollar.

“The reaction is a type of risk-off trade to buy the dollar and the yen against other currencies,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

“Without additional stimulus, the U.S. economy will slow and the global economy will slow.”

The dollar was last quoted at $1.1738 per euro (), holding onto a 0.4% gain in the previous session.

The British pound was quoted at $1.2869 after skidding by 0.86% on Tuesday as optimism about Britain’s trade negotiations with the European Union failed to shield sterling from the dollar’s advance.

The dollar bought 0.9179 Swiss franc after rising 0.3% in the previous session.

Trump, still being treated for COVID-19, on Tuesday turned to Twitter to break off talks with Democrats on an aid package even though U.S. virus cases are rising, which poses a serious threat to the economic outlook.

Highlighting the peril, Federal Reserve Chair Jerome Powell on Tuesday warned that the U.S. economy could slip into a downward spiral if the coronavirus is not effectively controlled and called for more economic assistance.

Traders will look to minutes from the Fed’s most recent meeting and comments from several Fed speakers for further signs of how central bankers view the outlook.

The increased risk aversion, however, did not move the dollar against the yen, which was last quoted at 105.64 , because both currencies tend to be bought during times of uncertainty, analysts say.

Trump has only just returned to work on Monday after three nights in hospital following his bombshell admission last week that he had contracted the coronavirus.

Medical professionals have said Trump’s early discharge from hospital puts others at risk of infection, and its spread among his most senior staff is swinging public opinion against him.

Support for his Democratic rival Joe Biden has grown by about four percentage points since mid-September, according to Reuters/Ipsos polling from Oct. 2 to 6, with 52% of likely voters backing Biden compared to 40% for Trump.

Investors are starting to warm up to the idea of Biden winning the election, which is a positive for the dollar, Mizuho’s Yamamoto said.

The Australian dollar steadied at $0.7106 in early Asian trade after tumbling by more than 1% on Tuesday. Traders say the faces more downside risks due to expectations that the Reserve Bank of Australia’s next move is to cut rates.

Across the Tasman Sea, the New Zealand dollar bought $0.6587, close to a one-week low.

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Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Index on its Backfoot as Virus Cases Accelerate




IBEX 35 Index, Covid, Economic Outlook – Talking Points:

  • IBEX 35 Index drops as Covid infections accelerate
  • Index continues to underperform regional peers
  • GDP outlook and deficit pose headwinds for economy

The Ibex 35 Index finished Wednesday’s trading session on its backfoot – down 1.67% – amid a worsening outbreak of Covid infections across the country and the broader European Union. Year to date performance for the Spanish index sits nearly -29 percent lower. This compares to the Euro Stoxx 50 index at -15 percent, and the FTSE 100 at -23 percent.

IBEX 35 Index (Daily Price Chart)

IBEX 35 Price Chart

Created with TradingView

While other EU countries are seeing rising cases, Spain continues to size an outsized rate of infections. The total case count rose above the 1 million-mark Wednesday afternoon, as Spain’s Health Ministry reported 16,973 new confirmed cases. A new round of prevention measures, including perhaps government mandated shutdowns, is likely to keep any bullish momentum from forming in the index.

Cumulative Covid-19 cases in Key European Economies

Cumulative covid cases Spain EU

Source: Our World in Data

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Spain’s budgetary problems also pose a problem for its economy – a problem that existed before the pandemic, and now exacerbated by it with the loss of economic output. Spain does plan to use just over 70 billion in grants made available from the EU recovery fund. However, it is not clear yet if Spain will accept more funding in the form of loans from the EU. The existing budgetary concerns are possibly giving Spanish policy makers concern over adding to the deficit.

IMF Economic Outlook Projections

IMF Economic Outlook

Source: IMF World Economic Outlook

Moreover, Spain faces one of the deepest economic contractions within the Euro Area according to the IMF’s latest economic outlook projections, with this year’s drop in GDP forecasted at -12.8%. However, the IMF expects Spain to outperform for 2021 with a projected 7.2% climb in growth versus France at 6.0%, and Germany at 4.2%. A value play could be argued at current prices, but the uncertainty given the virus and other factors in play would make that a highly uncertain gamble.

–Written by Thomas Westwater, Contributor for

Contact and follow Thomas on Twitter @FxWestwater

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EUR/USD May Challenge 2-Year Resistance. Fiscal Talks Making Headway




2020 Election, EUR/USD, Presidential Debate, EUR/USD Analysis, Polling Data – Talking Points

  • Third presidential debate ahead – will there be greater clarity this time around?
  • Democrats, Republicans are making progress on fiscal talks, lifting sentiment
  • EUR/USD could challenge 2-year resistance area between 1.1936 and 1.1965


It is officially less than two weeks until the November 3 election and polls continue to show Democratic nominee Joe Biden in the lead. However, the spread between him and incumbent President Donald Trump has somewhat narrowed after it burst open following the first presidential debate. Looking ahead, markets will be closely watching the third and final one on Thursday.

2020 US Election Polls

Chart showing 2020 election

Source: RealClearPolitics

Fiscal talks continue to dominate market mood as policymakers scramble to put a bill forward. House Speaker Nancy Pelosi’s spokesman said both sides are “closer to being able to put pen to paper to write legislation”. The big question continues to be whether another stimulus bill can be passed before the November 3 election, with issues like local government aid and liability protection for firms prolonging talks.

The third and final presidential debate is coming up in less than 36 hours, and the non-partisan Commission on Presidential Debates (CPD) has made an interesting new amendment. The organization said that while each candidate is speaking, it will mute the microphone of the other candidate to ensure each has enough time to convey their message.

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EUR/USD Analysis

EUR/USD has bounced from the previously-broken 1.1698-1.1720 support range and may now challenge 2-year resistance zone between 1.1936 and 1.1965. Capitulation could signal an underlying lack of confidence in the pair’s upside potential – at least in the short run. On the hand, breaking that multi-layered ceiling could signal the start of a bullish resumption.

EUR/USD – Daily Chart

Chart showing EUR/USD

EUR/USD chart created using TradingView

— Written by Dimitri Zabelin, Currency Analyst for

To contact Dimitri, use the comments section below or@ZabelinDimitrion Twitter

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Tesla Beats Earnings Expectations, Shares Pop




Nasdaq 100 Price Forecast:

Nasdaq 100 Outlook: Tesla Beats Earnings Expectations, Shares Pop

Fan-favorite electric carmaker Tesla (TSLA) released its quarterly report after the close Wednesday, treating investors with an earnings beat and a quick rally in share prices. The reported outline a continuation of profitability for Tesla, despite a decline in the average price of vehicles sold. Still, the more affordable models should begin to pressure competitors in the increasingly competitive space.

Suffice it to say, Tesla shareholders might have reason to remain optimistic in the months ahead as the company continues to expand its production plants across the globe. An increase in production capability should allow Tesla to reduce its cost per vehicle, simultaneously decreasing sale prices – pressuring competitors further. Either way, a rise in Tesla’s share price should help the Nasdaq 100 in the second half of the week as it is responsible for more than 3% of the index.

Elsewhere, earnings from companies that would be considered more closely aligned with a traditional economy also outperformed expectations. Rail company CSX (CSX), appliance-maker Whirlpool (WHR) and Chipotle (CMG) all beat Wallstreet estimates, seeing CSX and WHR shares rise in after-hours trading. Critically, the upbeat earnings from all three corporations might hint at a subtle recovery in the underlying economy that may be required for continued strength in the broader US indices.

Nasdaq 100 Price Chart: 4 – Hour Time Frame (September 2020 – October 2020)

nasdaq 100 price chart

In terms of price action, the Nasdaq 100 appears to be contained by resistance around the 11,800 mark and support near 11,600. Together, the two horizontal barriers may see the tech-heavy index trade sideways until big-ticket earnings from Apple, Amazon and Facebook are released next week. Nevertheless, a break through either level might see a continuation unfold. In the meantime, follow @PeterHanksFXon Twitter and check back at DailyFX for earnings coverage from a macroeconomic perspective.

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–Written by Peter Hanks, Strategist for

Contact and follow Peter on Twitter @PeterHanksFX

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