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Daily Outlook – 5 Nov. 2020
By: Andria Pichidi
Bond as well as stock markets remain supported. Investors clearly are warming to the idea of a split government that could finally bring additional stimulus, but keep overall spending and debt under control and thus support a low yield environment for longer. European bourses and bonds already benefited from the improvement in risk appetite yesterday with Eurozone spread narrowing and stocks recouping more of last month’s losses.
BoE delivered more QE with a £150 billion increase to its gilts purchases – more than the £100 billion expected. – rates unchanged and Brexit drama holds
German manufacturing orders came in weaker than expected, but still showed a rise of 0.5% m/m in the September reading, while the August number was revised up to 4.9% m/m from 4.5% m/m reported initially
NOTE: A divided Congress would stymie the policy agenda of either candidate. In the case of Mr. Biden, it would limit his ability to deliver a big fiscal stimulus package. The former vice-president’s desire to raise corporate taxes to 28%, would be likely to face a rocky reception in a Republican-dominated Senate.
The drop in taxes increased corporate profits, spurring a jump in stock buybacks that have helped to boost share prices over the past two years. These repurchases increase earnings on a per-share basis, which can boost the stock price.
EUR – recovers to 1.1740 – R1: 1.1794
GBP – jumps on BoE announcement. Currently at P: 1.3011 with R1 at 1.3117
AUD – sustains gains above 0.7180 – R1 at 0.7250 and PP at 0.7149
CAD – deeps to 1.3130 retesting Octobers lows – Next S at 1.3050
JPY – 104.37 resuming last week’s down leg S1:103.95
BTC – brokes 14000 barriers and it is currently at 14500
GOLD – continues trading around the $1,900 level (PP) – R1 at– 1918.80
USOil – holding on to its recovery of around $38 after 39.25 high.
TODAY: EU Retail Sales, ECB Guido speech, BoE Bailey speech, and FOMC announces its policy decision.
BTCUSD spikes to the nearly a 3-year high area, currently 14,500. All momentum indicators are strongly positively configured with MACD extending well above its neutral line suggesting further positive bias. RSI at 70. BTCUSD is traded above all MAs, which continue to align higher. 1H ATR 129.875 and Daily ATR 617.018.
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