From the start of this week, eyes were focused on US elections. These elections have special importance as come in the middle of one of the worst pandemics in the century and directly connected with vital issues such as the US fiscal stimulus package, tax policy, and the US trade relations with China and the rest of the world.
Today, Trump has proclaimed himself the winner in some decisive states like Michigan, and Pennsylvania meanwhile there still a big percentage of votes have not been counted, and while Trump has the edge in what is could the “in-person vote” Biden has the advantage of “the mail vote” hence, Biden has asked to wait until counting mail votes.
All of this concludes that it is too early to know who the President of the United State will be especially if Trump contested the results in case he loses before the Supreme court. In that scenario, markets could increase the demand for safe havens such as the US Dollar.
Equities
Global stock markets closed in the green on Tuesday for the second day in a row in what looked like an expectation of Biden presidential victory. However, the scene has changed on Wednesday and most of the US and Europe’s stock markets have lost all Tuesday gains, in preparation for the contested result’s scenario.
|
Stock Market |
Change % |
|
-1.1% | |
|
-1.5% | |
|
+0.7% | |
|
-0.8% | |
|
-2.4% | |
|
-1.8% | |
|
-2.2% |
EUR/USD and Main FX Markets
The greenback recovered all yesterday’s losses due to US elections uncertainty. The US Dollar index rose by 0.5% on Wednesday however, could not break above 94.30 and maintained its sideways move.
The EUR/USD rebounded around the 1.1600 thresholds and kept its neutral outlook. A close below 1.1621 could change it to negative.
The GBP/USD reversed direction and dipped below 1.3000. The pair’s outlook remains neutral while above 1.2772.
Gold and Oil
The Crude price recovered some territory this week as OPEC hinted at a cut extension however, US elections uncertainty weighed on the oil price on Wednesday. The Brent Crude slipped by 0.5%, a close below $39.60 could send the price towards 35.00.
The Gold price retreated on Wednesday below $1,900/oz amid increased demand on the US Dollar. That said, the precious metal has kept its neutral outlook unchanged. A close below $1,861 would change it to negative.
Looking Ahead
Markets will follow the US elections updates all day and will keep an eye on the US balance of trade at 2:30 PM (GMT) and the US non-manufacturing PMI numbers at 4:00 PM with the change in the US oil stockpiles at 4:30 PM.