The U.S. dollar is trying to make up for the losses that the U.S. currency has suffered this week on Friday. This may be helped by further uncertainty about the new aid program for the U.S. economy and the retreat of investors from risky assets with an accelerating epidemic.
The U.S. dollar index broke 93 points on Friday, extending the rebound from the seven-week low that was set on Wednesday. It seems that the strengthening of the US dollar may again be related to investors' return to safe assets, as there is still uncertainty about the talks on the aid package for the US economy in connection with the epidemic. Nancy Pelosi, Speaker of the House of Representatives, once again expressed her hope for a breakthrough in the negotiations on the stimulus package, although some issues still remain unresolved. As a consequence of the strengthening of the USD, the exchange rate of the main currency pair EUR/USD has gone back to 1.1800 and GBP/USD to around 1.13050.
The presidential debate between Donald Trump and Joe Biden has brought little to the market. The debate was much calmer than the previous one and mainly focused on the tax returns of the current US President. According to the polls, the debate was slightly won by Democratic candidate Joe Biden. US futures contracts are close to yesterday's closing levels, which shows that the event did not have a significant impact on the market. This impact may in turn be influenced by today's macroeconomic data. Today, preliminary PMI indices for both European and US economies will be published. The data may show the scale of deceleration of the manufacturing and service sector compared to September.
Meanwhile, since June oil prices have been stuck at $40 per barrel. The chances of recovering demand for oil seem to have diminished by the reimpositioning of restrictions by governments of countries struggling with the strong wave of the COVID-19 epidemic. In turn, greater downward pressure on prices seems to be exerted by the resumption of Libyan oil exports as production resumes once the military blockade has been eased. Meanwhile, the latest data from the EIA shows that U.S. oil stocks fell by 1.001 million barrels in the week ended October 16, while petrol stocks unexpectedly increased by 1.895 million barrels. Consequently, it seems that the range of WTI oil price fluctuations is limited from the top by 41.60 USD and from the bottom by 39.40 USD.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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