Factors that have affected the appetite for risk will increase pressure on markets. The COVID-19 epidemic is gaining momentum every day. Statistics on the number of people falling ill per day set a new record every day.
The new rules of social distance, which are currently being introduced only in European countries, will have an impact on the economy in the near future. So far, it is difficult to imagine how difficult it will be for countries to experience the second wave of coronavirus.
So far, the markets are feeling relatively well. Election euphoria is diverting attention from other important macroeconomic indicators. Waiting for the adoption of the stimulus package warms up interest in risk assets. If the package is accepted, a huge amount of money will come to the market, which will be spent by Americans on goods and services.
The S&P500 index rose 1.1% on Friday to 3476 and almost reached the strong resistance line of 3500. If the aid package is accepted soon, we will see new historic highs.
The EUR/USD pair rose 0.56% on Friday to 1.1823, making a new two-week high. The pair seems to have closed above its key level at 1.18, which may signal continued growth. Of course, the ECB is not comfortable with this situation as the economy will recover more slowly because of the strong Euro. It should be noted that the ECB’s balance sheet increased by a record 170 billion Euro over the last week, which should put pressure on the European currency. The current situation is uncertain. There are no impulses for a particular upward or downward movement. There is a high probability that the EUR/USD pair will float in the range of 1.1750-1.1950.
Hurricane Delta may make adjustments to the operation of oil rigs in the Gulf of Mexico, which should in due course affect the price of a barrel. On Friday, the price of WTI oil fell by 1.55% to $40.8 per barrel. More importantly, this was due to a possible fixing of traders’ positions at the end of the week. A growth factor could be OPEC+’s decision not to increase oil production next year. Given the general news background, oil growth may continue with the immediate target of $43 per barrel.
What awaits us today?
8.00 Wholesale Price Index in Germany since the beginning of the year
13.00 Address by ECB Head C. Lagarde
22.00 Housing Price Index from REINZ in New Zealand for September
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