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The dollar retreats due to new hopes of stimulus, consumption improves in China

This is what you need to know to trade today Monday, October 19:

Markets are cautiously upbeat and the US dollar is falling amid fresh hopes that the US will reach a stimulus deal ahead of the election. China’s third quarter GDP fell short of estimates, but includes several positives. Concerns about coronavirus cases in the eurozone and Brexit talks are weighing on sentiment.

Fiscal stimulus: US President Donald Trump has said he is willing to go for a stimulus deal bigger than House Speaker Nancy Pelosi’s $ 2.2 trillion package before the election. He would have to convince the hawks among Senate Republicans to back a big aid package.

The US retail sales beat estimates with a 1.9% jump in September, showing the resilience of the economy and potentially reducing the need for additional government support. Pelosi has set a Tuesday deadline to conclude the talks, while Senate Republicans focus on the Supreme Court nomination.

American electionsAspiring Joe Biden continues to lead in national and state polls, with forecasts pointing to around 90% chance of winning according to FiveThirtyEight and The Economist. The Senate race is significantly closer, with just a 74% chance for Democrats according to these websites.

Jerome Powell, chairman of the Federal Reserve, will speak later Monday at a panel on digital currencies.

China reported that its economy grew by 4.9% annualized in the third quarter of 2020, worse than expected. However, the Gross Domestic Product was constrained by an increase in imports, which is a sign of the growth of consumption in the second largest economy in the world.

The Chinese economy depends on demand from elsewhere, and the Increase in COVID-19 Cases in Europe May Slow Growth. Italy, which initially escaped the second wave, imposed new restrictions, joining other countries. France, Spain, the Netherlands and Belgium are the hardest hit in the eurozone, but Germany is also fighting the virus.

The EUR/USD it is trading around 1.17, at the bottom of the recent range. Christine Lagarde, president of the European Central Bank, said that the recovery risks losing momentum amid the new restrictions and that her institution has not exhausted its toolbox.

Gold is on the rise, trading above the $ 1,900 level, which it has been struggling at in recent weeks.

Brexi: The Prime Minister, Boris Johnson said the UK should prepare for a no-deal Brexit in January after expressing disappointment at the EU’s decision not to step up talks or make enough concessions, according to London.

On the other hand, Bloomberg reports that the UK could dilute controversial Internal Markets Act, which could pave the way for a breakthrough. In addition, Michel Barnier, the EU chief negotiator, canceled his planned visit to London, but will have a phone call with his British counterparts.

The UK is also struggling with an increase in coronavirus cases, which has caused tensions between the central government and northern English cities. In addition, Moody’s downgraded the country’s credit rating.

The NZD / USD it is on the rise following Prime Minister Jacinda Ardern’s impressive victory in the New Zealand general election. His Labor Party won an absolute majority after successfully tackling the virus.

The cryptocurrencies They are consolidating recent gains, with Bitcoin trading above $ 11,400.

Credits: Forex Street

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