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Gold & US Dollar Hold Ground Due to Risk of Elections Dispute

Gold & US Dollar Hold Ground Due to Risk of Elections Dispute

The RBA slashed interest rates while markets await the US election results.

The US president and Congress elections weigh heavily on market sentiment as investors prefer the wait and see approach. A clear result is always welcome regardless of the winner’s identity, yet the contested result’s scenario looks more likely after Trump’s multiple complaints about the mail vote. This storyline increases uncertainty and could lead to a further risk aversion sentiment.

The RBA has cut the interest rate from 0.25% down to 0.1% and announced the purchase of $100 billion of government bonds of maturities of around 5-10 years over the next six months. The RBA governor Lowe said that the combination of the bond purchase with a lower interest rate would assist the recovery by lowering financing costs and supporting asset prices and balance sheets.

Equities

Global stock markets have rallied on Monday on better than expected manufacturing PMI numbers in the US and Europe. The manufacturing PMI of October rose in the US to a nearly 17- year high amid increased demand for motor vehicles and food.

Stock Market

Change %

S&P 500

+1.2%

Dow Jones

+1.7%

NASDQ

+0.1%

Japan 225

+1.2%

DAX 30

+1.7%

FTSE 100

+1.2%

CAC 40

+1.9%

EUR/USD and Main FX Markets

The newly imposed lockdowns in Europe combined with the uncertainty of the US elections have kept the market’s risk appetite in check and kept demand for safe-havens. The US Dollar index hit on Monday a five-week high at 93.97. Therefore, the price could rally further towards 94.65 while above 94.04.

The EUR/USD rebounded from the low end of the current 1.1621- 1.1909 trading zone. The pair’s outlook is neutral while above 1.1621 and a close below this level changes the outlook to negative.

The GBP/USD retreated this week on news of imposing a partial lockdown in England. The pair’s outlook remains neutral while above 1.2772 and a close below that level changes the outlook to negative.

Gold and Oil

The Oil price retreated on Tuesday due to increasing Libyan supply and lower expectations of global demand caused by the second wave of COVID-19. Italy joined Germany, France, and the UK in tightening the coronavirus restrictions imposing curfews and travel bans between the most hit regions. The Brent Crude tested on Monday its lowest level in over four months at $36.38 the price could be on them for a test of $35.00 a barrel.

The Gold price rose on Monday by 0.8%. The precious metal outlook remains neutral while above $1,861 and a close below that level changes the technical outlook to negative.

Looking Ahead

The EUR/USD traders would follow the Bundesbank Mauderer’s speech at 10:00 AM (GMT) then at 4:00 PM markets will find out about the US factory orders of September. The Bundesbank members Balz and Maurderer will speak at 5:00 PM and 7:00 PM respectively.

Esta información/estudio preparada por Mahmoud Alkudsi no tiene en cuenta los objetivos específicos de inversión, la situación financiera o las necesidades particulares de una persona. El analista de estudios es, principalmente, responsable del contenido de este informe de estudio, en parte o en su totalidad, certifica que los puntos de vista sobre las compañías y sus valores expresados en este informe reflejan con exactitud sus puntos de vista personales, y como consecuencia, toda persona que actúe basándose en ellos lo hace bajo su propio riesgo.

El estudio proporcionado no constituye los puntos de vista de JME Financial Services (Pty) Ltd., ni es una invitación a invertir con JME Financial Services (Pty) Ltd. El analista de estudios certifica, además, que ninguna parte de su remuneración ha sido, es o será directa o indirectamente relacionada con recomendaciones o puntos de vista específicos expresados en este informe.

A partir de la fecha en la que se publique el informe, el analista de estudios y su esposo/a o familiares que dependen financieramente de dicho analista, no mantendrán intereses en los valores recomendados en este informe (“como “intereses” se incluyen la titularidad directa o indirecta de los valores).

El analista de estudios no está contratado por JME Financial Services (Pty) Ltd. Le animamos a buscar asesoramiento con un consejero financiero independiente con respecto a la idoneidad de la inversión, en virtud de otra participación separada, cuando considere oportuno que es conforme con sus objetivos específicos de inversión, su situación financiera o, sus necesidades financieras particulares antes de comprometerse a invertir..

Las leyes de la República de Sudáfrica regirán cualquier reclamación relacionada o que surja de los contenidos de la información/estudio proporcionado.