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Global volatility cooldown – Market Overview – October 8

Global volatility cooldown – Market Overview – October 8

Nothing seems to impress global equities, no matter the degree of importance or controversy

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.


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