Market Overnight Wrap: 6 November

Market Overnight Wrap: 6 November

Key Points:

Biden on course to win election but don’t write off Trump

USD slumps with DXY back at 92.50, commodity currencies surge

Gold jumps 2.7%, Bitcoin breaks $15000 for first time in 2 years

Still no outcome on the election as key states still have votes to count with markets pricing in a Biden win. The Senate will likely remain GOP and the House Democrat so the divide is still there with regard to getting anything through Congress. If Biden does win, he’ll push for a larger stimulus package than the Republicans were offering and that’s what’s got markets excited. Trump is grabbing headlines once again challenging some of the voting but lawyers have been quick to throw out his claims in both Michigan and Georgia. It’s unlikely that he will concede if he loses and could appeal the judicial decisions so we could still be weeks away from knowing with 14 December as the deadline for Congress to announce the winner. Powell addressed the markets reiterating his usual rhetoric that the Fed stand ready but the next round of stimulus needs to be fiscal. The script remains the same so markets largely shrugged off the non-event. Prior to that we had seen a beat on the weekly jobless claim headline at 751K from 735K estimated but again it was just a sideshow to the risk frenzy. Gold jumped 2.7% on the day to breach $1950 as the USD slumped across the board back to 92.50, once again the commodity (growth) currencies benefitting from the stock rallies. AUD broke the election day high of 0.7222 to squeeze to 0.7290 and USD/CAD looks well on its way to retest 1.30. EUR and GBP regained ground on the greenback with 1.1880 key resistance for the EUR. The high on the day was 1.1860. USD/JPY also suffered falling back to test below 103.50 for the first time since March. All US indices performed well with Nasdaq up another 2.59% but outperformed by the Russell at 2.65%. The BoE left rates unchanged but increased QE giving GBP a boost back to regain 1.31 in line with other USD weakness. Largely ignored is the fact that the US is posting 100K+ in Covid cases now with Europe also in trouble. Germany’s second wave is much higher than it’s first. Risk doesn’t care, it’s all about cheap money. Today in Asia we hear from the RBA again with their Statement on Monetary Policy but the Fed have more power over the Australian currency than the RBA do so can’t see anything to change the course of the AUD at the moment. Tonight in the US session we see unemployment data from the US and Canada but focus will remain on getting the voting finalised.

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