Analysts forecast a stimulus package no matter which candidate wins, while investors increase bets that Biden would be the next US President.
Polls are showing that Americans are losing confidence in U.S. President Donald Trump’s handling of the coronavirus pandemic. Biden is taking the lead. A Democratic victory in U.S. elections next month revives hopes for more U.S. stimulus. The possibility of stimulus is also helping to counter investor wariness about a Democrat pledge to hike corporate tax rates.
Rising expectations of a Biden victory has had a calming effect on market volatility around the U.S. election date.
Talks stalled with Democrats on a comprehensive aid package earlier this week. Following this the U.S. President Donald Trump on Thursday called for a “skinny” relief bill. This light aid package will include elements such as direct payments and a bailout to the struggling airline sector.
Data on Thursday showed the number of jobless claims in the U.S. came in 20,000 higher than economists expected at 840,000. Unemployment in the world’s largest economy remains historically high and a recovery in the labour market is losing momentum.
Additionally, the WHO reported a record one-day increase in global coronavirus cases, led by a surge of infections in Europe.
On the Brexit front, there are signs a bare-bones agreement is taking shape. However, negotiators warn of a huge amount of textual work even if a deal is struck. Another report suggests the EU is preparing for negotiations to last until mid-November. Several sticking points still remain. The EU’s Oct. 15-16 summit will evaluate the progress
START TRADINGForex – Investors increase bets Joe Biden would win
The probability of a Biden win boosts appetite for currencies hurt by the trade war between Washington and Beijing.
The dollar index eased 0.1% at 93.47 and it is down 0.4% for the week. It fell 0.8% last week. It reached a two-month high at 94.75 in late September.
The euro rose 0.1% to $1.1776.
The risk-sensitive Australian dollar rose 0.2% to $0.7186, putting it a fraction higher for the week. However, analysts interpret a Tuesday central bank statement as a signal of monetary easing to come.
Sterling crept 0.2% higher to $1.2961 and has held firm this week as prospects for a Brexit deal appeared to improve.
Versus the euro, the pound was up around 0.2%, at 91.05 pence per euro.
Oil prices edged up, propelled by supply outages caused by a storm in the Gulf of Mexico and a strike of offshore workers in Norway. Both benchmark contracts were on course for their biggest weekly gains since early June. Brent was up 16 cents at $43.50 a barrel. U.S. West Texas Intermediate crude rose 14 cents to $41.33.
A weaker dollar boosted gold, which gained 1.1% to $1,914.28 per ounce.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money