The number of infections seems to improve in Europe. However, in the United States, it continues to grow at maximum levels that already approach 200k cases of contagion per day.
The main focus of the market is on the government aid packages necessary to maintain the economy that is still burdened by mobility restriction measures
At the end of next month, the lending facility measures for individuals and companies that the Federal Reserve had implemented at the beginning of the crisis will be extinguished.
Fed Chairman Powell had already expressed the intention of extending it indefinitely, given the economy's still precarious situation. Nevertheless, Secretary of the Treasury Mnuchin yesterday said his opposition to this measure, arousing concern in the market.
The stimulus package that has to be approved by Congress is still far from being implemented. The soonest in taking place would be at the end of January, as long as the arithmetic of distribution in the chambers facilitates it, so it is still uncertain until the electoral count's final results are known.
The market has reacted slightly negatively to this situation, although the stock exchanges have recovered their losses.
Where it is being noticed the most is in the fixed income market. The T-note yield has fallen to the 0.80% zone, reflecting a slight increase in risk aversion among investors.
If this situation of lack of agreements that can only be framed within the political sphere with a clear confrontation between the two North American parties and the lack of acceptance of the electoral results, the Federal Reserve could be forced to act in the meeting of December with new monetary stimulus measures.
These could be reflected in an increase in the amounts of bond purchases that the Fed has in its QE asset purchase program. And even in the implementation of unconventional monetary policy measures such as the ECB's TLTROs.
If so, the US Dollar would be pushed down more intensely.
It is currently trading in tight ranges against almost all currencies.
USD/JPY could break down the 103.26 area and head towards minimum levels at the beginning of the crisis and previously since 2016 at levels around 101.00.