VOTING EARLY HERE Sign during American election. Image source: JIXUE YANG © 123RF.com
The US Election Day Takes the Cake in the Most Eventful Week in 2020
This is poised to be the most eventful and probably the most volatile week throughout 2020 so far, with top-tier economic and political events all around. Undoubtedly, the most widely anticipated of those is the Presidential Election in the US, which is going to take place on Tuesday.
The market has been pricing in a very probable Joe Biden win for quite a while now, but that is not to say his victory is assured. The market would receive every of the so-called swing states that goes to Trump as a surprise, which could, in turn, incite massive volatility outbursts on most US assets.
Due to the epidemic conditions in the country and the unprecedented in scale early voting, counting the ballots could be delayed. Any such delays, whether they be by several hours or several days, would likely unnerve the markets.
It has been widely speculated that a narrow Joe Biden win would not be received lightly by Donald Trump who has been barraging series of tweets, questioning the legitimacy of distant voting. By casting a shadow of a doubt over the fairness of the election process, he has prompted extra uncertainty.
In a scenario in which Joe Biden wins but Donald Trump refuses to cede power and takes the outcome of the election to the US Supreme Court, markets are likely to remain unnerved by persisting uncertainty.
It seems that only a landslide Biden victory, the legitimacy of which would be hard to dispute, would lead to diminished overall volatility shortly after the election results are published.
Meanwhile, a Trump victory would certainly come in as a surprise – a Black Swan type event – which could serve as a catalyst for further volatility spikes in the next following days.
Jerome Powell and the Rest of the FOMC Have to Weigh in On the Election Results
The Federal Open Market Committee of the Federal Reserve is scheduled to meet on Thursday to deliberate on its current monetary policy stance. The initial market forecasts anticipate the near-negative Federal Funds Rate to be kept unchanged at 0.25 per cent.
The gathering is to be held just a couple of days after the election date, which represents the most substantial reason as to why the Committee is likely to refrain from making any significant changes currently.
FOMC members would have to wait for the results in order to weigh in effectively on who would shape Washington's policy over the next four years. Moreover, the Committee would have to consider the possible roads ahead for a potentially new Government as far as fiscal policy is concerned, as MP needs to work in conjunction with FP.
Finally, the decisions reached during ECB's recent meeting could underpin the ultimate outcome of FOMC's next meeting in that the FED could decide to remain vigilant until December and monitor the further development of the pandemic.
Non-Farm Payrolls at the End of the Eventful Week
The third most prominent event taking place this week is once again happening in the US. The release of the Non-Farm Payrolls data would underscore the recent developments in the labour market.
According to the initial market expectations, the unemployment rate is projected to remain on the current trajectory and depreciate by 0.2 per cent in October. So far, the recuperating American economy has been able to reduce the rate in five consecutive months.
US Unemployment Rate. Image source: TradingEconomics.com
Should headline unemployment fall to the anticipated 7.7 per cent mark, such a result would have typically been interpreted as a positive sign for the value of the dollar. This week, however, the significance of the aforementioned events could overshadow the potentially robust employment numbers.
At any rate, the greenback looks poised to be the most volatile currency this week. Given that the BOE is also scheduled to deliberate on its Official Bank Rate on Thursday, the GBPUSD pair becomes of prime interest.
As can be seen on the 4H price chart below, the price action has been establishing a bearish flag pattern ever since the conclusion of our previous analysis of the pair. Currently, the GBPUSD is trading nearer to the major support level at 1.29000.
The latter could serve as a turning point for the price action, as it has done on several occasions in the past. Nevertheless, the continually surging demand for the greenback as a safe currency could continue to drive the cable down south.
GBPUSD 4H Price Chart. Image source: Trendsharks ©, created with TradingView.com
Other Prominent Events to Watch for:
Monday – ISM Manufacturing PMI in the US.
Tuesday – RBA Cash Rate in Australia; New Zealand Unemployment Rate; BOJ Monetary Policy Minutes.
Wednesday – ISM Services PMI in the US; ADP Non-Farm Payrolls in the US; Retail Sales in Australia; Qualcomm Inc. is reporting AMC.
Thursday – Official BOE Cash Rate in the UK; EU Retail Sales; Alibaba Group Holding Ltd. BMO;
Friday – Unemployment Rate in Canada.
Gold is undergoing a correction, as investors take profits to offset losses from falling stock prices, impacting their margins. However, we anticipate a renewed wave of [...]
The Swiss stock market index is mirroring its global counterparts, such as Germany 40 and US100, experiencing a sharp decline following the announcement of new [...]
We’re analyzing the weekly chart to grasp the broader market trend. Over the past three years, the US30 index has surged by 17,000 points, often resembling a nearly straight [...]
Over the past week, the DAX has experienced a sharp decline, plunging by an astonishing 3,400 points. This downward movement is not isolated, as its international counterparts, such as the UK100 and US100, are also facing significant [...]
EURUSD recently formed a double top at 1.0930, signaling a potential trend reversal, and has since begun a correction. After a 600-pip rally since early March, a pullback at this stage is both expected and healthy. Given these conditions, we are placing a [...]
Since early March, EURJPY has surged nearly 1,000 pips, providing us with several excellent trading opportunities. However, as the rally matures, many early buyers are beginning to take profits, leading to a noticeable slowdown in the uptrend. On Friday, the pair formed a [...]
The AUDJPY currency pair continues to be dominated by bullish momentum, as multiple golden cross patterns reaffirm the strength of the ongoing uptrend. Despite this, we are witnessing a much-needed [...]
The EURAUD currency pair appears to be undergoing a trend reversal, signaling a potential shift in market direction. A notable technical development is the formation of a Death Cross on the chart, a widely recognized bearish indicator that typically suggests a [...]
After securing an impressive 200-pip profit last week, the EURJPY currency pair is now undergoing a southward correction, retracing some of its recent gains. Despite this temporary pullback, the Golden Cross remains intact, reinforcing our view that the overall trend continues to be [...]
The appearance of a Golden Cross in Silver strengthens our analysis that the metal is currently in a strong uptrend, indicating further bullish momentum in the market. This technical pattern, where the short-term moving average crosses above the [...]
This trade presents a considerable level of risk and can be classified as an opportunistic move based on recent price action. The GBPUSD currency pair has experienced a substantial bullish rally, surging by nearly 500 pips in a strong upward movement. However, after this extended period of appreciation, the pair is showing signs of a potential [...]
The anticipated Death Cross on the SMI20 appears to be failing as price finds strong support at the 23% Fibonacci retracement level. After testing this area, the index has shown bullish strength, printing several large green candles, signaling an increase in [...]
A Golden Cross has just appeared on the USDJPY chart, signaling a potential bullish move. This technical pattern occurs when the 20 period moving average crosses above the 60 period moving average, a widely recognized indication of increasing [...]
After 2 months of a down trend, we finally see some indications of price recovery for Oil. The golden cross, a historic buy signal, supports this [...]
For the past month, the German DAX40 has experienced a remarkable 10% surge, reflecting strong bullish momentum. Despite ongoing market volatility and frequent pullbacks, every dip continues to attract fresh buyers, reinforcing the [...]
Oil continues its downward trajectory, despite occasional pullbacks. The overall trend remains bearish, reinforced by multiple Death Cross patterns, a classic sell signal indicating further weakness. Adding to this bearish outlook, the critical [...]
Over the past few days, gold has experienced a sharp decline of more than $100. This downturn can be attributed in part to traders securing profits to manage their margins, which are under strain due to the significant drop in major indices. Currently, gold has fallen below the [...]
The NASDAQ 100 index is showing strong bullish momentum, as evidenced by the formation of a Golden Cross on the chart. This classic buy signal occurs when the short moving average crosses above the long term moving average, suggesting that upward momentum is [...]
The EURAUD currency pair has encountered a significant resistance level, failing to break above the critical 61% Fibonacci retracement level. This suggests that bullish momentum is weakening, reinforcing the case for a potential downward move. Given this technical setup, we favor entering a [...]
The UK100 is experiencing a remarkable rally! Over the past few weeks, the British stock market index has surged nearly 800 points. Each minor dip has attracted more buyers, fueling the bullish momentum. However, since last week, we’ve observed a slight [...]
