All market noise
derived from political issues such as statements, always unforeseen and
disturbing, by President Trump, or the announcements made yesterday by British
Prime Minister Boris Johnson giving a request to the European Union for laying
the foundations of a Brexit agreement before of October 15, has been ignored by
the market.
The same market is
beginning to be tired of contradictory statements that change from one day to
the next. It seems that they will not be considered in the same way that they
would, in normal circumstances, less atypical than what we are witnessing currently.
US stimulus
As a result of all
this, investors and market participants seem to focus only on facts such as the
potential US fiscal stimulus package.
After causing a
considerable state of uncertainty in the market by declaring that the talks are
terminated, Trump turned back on the statements and announced that it is
necessary to continue negotiating to provide the North American economy with
the support it needs to overcome the pandemic crisis.
He also mentioned the
Chairman of the Federal Reserve Powell with whom, for once among many against,
he agreed.
Therefore, the market
is again betting on an agreement (even if it is minimal), which could be
reached even before the elections' date. This is uncertain, but if it happened,
the stock markets would experience a significant upward momentum. For this
reason, the leading North American indices have risen again today with modest
rises but enough to approach the resistance levels that they need to break
through to resume the uptrend.
USA500 has reached today the
area around 3422, a daily close and surpassing this level would activate a
reversal pattern with a theoretical target slightly above the all-time highs
around 3600.
In a scenario of
better market risk sentiment, the US Dollar would tend to depreciate even if
only timidly like the one we are witnessing lately. The DollarIndex moved away from the central
resistance zone located at 94.04 and without exceeding the 100h SMA limit,
which goes through 93.71 currently.
A weaker Dollar,
however, is also not significantly affecting EUR/USD, which has traded in a
tight 1.1700 and 1.1800 range in the last two weeks. The statements of the
members of the ECB (Vice President De Guindos), making known to the market
that, although they have neither competition nor an exchange rate objective, a
stronger Euro affects their monetary policy decisions, act as a brake on any
rise in the EUR/USD pair above the 1.1800 levels.
