The first week of November brought very strong increases in stock prices in the United States, but also in Asia and Europe. Moreover, virtually all asset classes have gained this week as a result of a decrease in concerns about the outcome of the U.S. elections and a USD sell-off.
The U.S. dollar is the currency that seems to have lost more than 1.6% this week, and the dollar index calculated by Bloomberg has fallen to its lowest levels since May 2018. Yesterday, the interest rate on the USD expressed by the 3-month Libor rate also fell the most since early July. One of the biggest winners of this situation seems to be the New Zealand dollar. The NZD/USD rate has reached its highest level in 6 weeks, and if the trend continues, the NZD may be the most expensive against the USD since March 2019.
New Zealand Prime Minister Jacinda Ardern outlined the most important economic priorities for the rest of the year at a business address in Auckland, saying that before Christmas the SME loan program will be extended to three years and the interest-free period to two years.
The MPC will not change the rates, but will emphasize too much strength of the zloty
A fall in the value of the dollar on the broad market seems to cause the zloty to strengthen. The USD/PLN exchange rate fell from 3.97 to 3.80 in a very short period of time, all this in anticipation of the Monetary Policy Council's decision, which was postponed to November 6 without giving any reasons. It is unofficially said that the MPC wanted to find out what restrictions the government is preparing in order to be able to analyze them along with their potential impact on the economy.
The market consensus indicates no interest rate changes in Poland. The reference rate is still expected to be 0.1 percent. However, it is speculated that the MPC is preparing further support measures and some kind of joint actions with the government in response to a bad pandemic situation. The MPC will probably continue to point to an over-strong zloty, which may result in the fact that the currently observed strengthening of the zloty may only be temporary.
The passing week seems to bring a strong growth of stock indices. The Nasdaq 100 index grew by almost 8%, followed by the Euro Stoxx 50 index, which grew by 7.5%. The German DAX boasts a 7.4% increase. It seems that the main factor pushing the indices is the drop in risk in the markets due to the fact that the election result is already practically known - the 46th President of the USA will most likely be Joe Biden.
Fading employment growth in the US
Today, investors will be waiting for data from the American labor market, the popular non-farm payrolls, which will be published at 2:30 pm.
Employment outside of agriculture in the US probably increased by 600 thousand in October this year, i.e. less than 661 thousand in September. This would be the smallest increase in employment since the labor market started to recover in May after a record loss of 20.787 million jobs in April.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
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