On Tuesday, October 20, the euro rose to a one-week high as global stocks rebounded from early declines. Investors are broadly in consolidation mode before U.S. presidential election that will be held on November 3, 2020.
Significantly, the greenback declined by 0.31%. It was on track for its second day of drops as Nancy Pelosi, House Speaker set the end of the day as a final date for discussions about a Covid-19 aid package.
Markets remained within well-worn recent ranges as fading optimism for a U.S. coronavirus aid package with increasing infections in Europe kept the overall mood cautious.
According to currency strategist and MUFG in London, Lee Hardman, currency markets are in wait-and-watch mode with traders reluctant to take big bets before such a significant event risk.
Significantly, the euro gained 0.3% and hit a one-week high at $1.18065. Meanwhile, in previous session it declined 0.1% and touched $1.17600 in early London trading.
That reflected a broader improvement in European stock markets which jumped into positive territory after registering some early losses. Moreover, U.S. stock futures also increased by 0.6%.
“Win by Joe Biden would lead to more fiscal stimulus”
Another vital thing to mention is that the markets believe that a win by Democrat Joe Biden would lead to more fiscal stimulus. Investors are also suspicious of a contested election result that might increase the safe-haven appeal of the U.S. dollar.
Moreover, a senior market analyst at JFD Group, Charalambous Pissouros reported that as U.S. elections are coming. With coronavirus infections throughout the globe growing at a fast pace, investors may refrain from engaging into large trading positions.
Besides, France announced a massive rise in people hospitalized and Ireland reported some of Europe’s most stringent restrictions.
Additionally, the Australian dollar fell 0.4% and settled at $0.7045. Thus, reaching a three-week low of $0.7032 on rising expectations of monetary declining following month by the central bank.
The Reserve Bank of Australia (RBA) latest policy conference approved. The Board had reviewed cutting rates and purchasing longer-dated debt as a means to help the economy and regulate the currency.
Besides, Sterling remained almost intact. In the previous session, it faced small gains and settled at $1.2941.
David Frost, Britain’s Chief Brexit Negotiator, reported there was no basis to continue trade talks with the European Union except there was a fundamental change in Brussels’ approach.
Significantly, the dollar index fell 0.2% and settled at 93.227, on track for a second consecutive day of declines.