On average, the Dow Jones, S&P 500 and Nasdaq 100 suffered their worst week in over 7 months ahead of the US Presidential Election. This is as the VIX ‘fear gauge’ spiked the most since June over the same period. Rising volatility and a premium for safety propelled the anti-risk US Dollar and Japanese Yen. Anti-fiat gold prices suffered.
A combination of rising Covid-19 cases, an erosion of US fiscal stimulus hopes and a contested election have likely worked together to deteriorate risk appetite. The sentiment-linked Australian and New Zealand Dollars underperformed. Growth-linked crude oil prices declined the most since the middle of April.
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All eyes turn to the November 3rd election as markets will try to digest what the outcome could mean for another fiscal package. The Senate adjourned for recess this past Monday until perhaps November 9th. Without its blessing, policymakers won’t be able to get a package through. This is complicated by the unknown timeline of when the outcome of the election could be understood.
Check out DailyFX’s content around this likely volatility-inducing event here.
Another key event will be November’s FOMC monetary policy announcement. No changes are anticipated in benchmark lending rates or in the pace of asset purchases. The Fed has been reiterating concern over a lack of progress in fiscal stimulus in recent weeks. Traders may watch for any commentary around whether or not the central bank could step in more to support growth.
October’s non-farm payrolls report may show a slowing pace of job gains since the extra unemployment benefits of the $2.2 trillion CARES Act expired and a second one pending. Rising coronavirus cases have resulted in lockdowns being reintroduced, particularly in Europe. Brexit talks also continue. What else is in store for markets in what is expected to be a volatile week?
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A steep fall in EUR/USD is on the cards if strong support at 1.16 breaks after last week’s strong hint by the ECB that it’s planning still more stimulus for the Eurozone economy in December.
A significant rise in coronavirus infections and US presidential election jitters may buoy the haven-associated US Dollar ahead of the FOMC interest rate decision.
Sentiment-sensitive crude oil prices may have a volatile week ahead of the highly-anticipated US presidential election and the FOMC rate decision.
Gold is likely to get buffeted next week as investors watch the US presidential election voting out-turns
As the run up to election day comes to an end, USD/MXN looks for any clues on risk appetite
The future implications of the US election may influence AUD/USD following the RBA and Fed rate decisions as Congress struggles to pass another round of fiscal stimulus.
Stock markets could be in for some more turbulence with the U.S. election next week; lines and levels to watch on the charts.
Gold prices declined in the aftermath of bearish technical cues, but a key zone of support was reinforced. XAU/USD volatility risk is elevated ahead of the US Presidential Election.
A Euro reversal off technical downtrend resistance now risks a larger correction in price. Here are the levels that matter on the EUR/USD weekly chart.
Stocks capped off their worst month since March and run the risk of suffering further losses after multiple levels of support were breached. Where are stocks headed in the week ahead?
US DOLLAR WEEKLY PERFORMANCE AGAINST CURRENCIES AND GOLD