Fed Chairman is expected to speak today - 19.10.2020

Senior Analyst

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Todays’ Market Summary

Top daily news

Democratic candidate Joe Biden continues to outrun Republican candidate Donald Trump ahead of the November 3 presidential election.This supports the American stock market, precious metals, oil, and some agricultural commodities quotes, but weakens the US dollar.Today, investors do not expect any important corporate reports and significant macroeconomic statistics in the US.

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Forex news

Today, the US dollar index is declining for the 2nd day in a row. Democratic candidate Joe Biden's chances of winning the November 3 presidential election remain very high. According to the latest polls, he is ahead of Republican Donald Trump by 10%. Investors do not rule out that Joe Biden may approve an initial $3.5 trillion economic aid package, if he wins, rather than the $2.4 trillion that Democrats are now offering before the elections. It is assumed that this amount would be provided through the Fed's money emission and would increase the government debt, which can have a negative impact on the US dollar. Yuan continued to strengthen against the US currency due to excellent economic data. China's GDP growth accelerated in Q3 to 4.9% from 3.2% in Q2, industrial production and retail sales rose and unemployment fell in September. The currencies of Australia and New Zealand, that export more than half of their goods to China, also strengthened slightly.

Stock Market news

On Friday, American stock indices were almost unchanged. As we have already noted, the growing number of new Covid-19 cases in the world, as well as the postponement of the allocation of aid to the US economy, faciliated the downturn. At the same time, the US stock market was supported by an increase in September retail sales and October Michigan Consumer Sentiment economic indicator. Today, futures on US stock indices are rising thanks to Pfizer’s announcement of a coronavirus vaccine by the end of this year.Its shares gained 3.8%. John Hopkins University reported the number of Covid-19 cases worldwide reached 40 million. European stock indices are also advancing today on the back of strong corporate reports from Philips and Danone. Refinitiv predicts a 36.7% (y/y) cumulative decline in profits for STOXX 600 companies in the 3rd quarter of 2020. This is much better than the 51% drop in the 2nd quarter. Today, the United States are not expected to publish any significant economic indicators, but some Fed representatives will speak today, including the chairman Jerome Powell. Also, Honeywell, IBM and other corporations are expected to release their quarterly reports.

Commodity Market news

World oil prices are declining slightly today for the 3rd day in a row. In other words, their overall decline was not significant and amounted to 1.6%. The main negative factor is the surge of coronavirus cases number worldwide and the risks of a global demand downturn. At the same time, the oil quotes were supported by the S&P Global Platts projecting that the production of shale oil in the US will decrease by 900 000 barrels per day (bpd) in 2020 and by another 1.1 million bpd in 2021. According to the official data of the US Energy Information Administration (EIA), oil production in the United States is now 10.5 million bpd, which is below the February high of 13 million bpd. The EIA notes that the average US oil production in 2019 was 12.2 million bpd. By the end of this year, it will be reduced to 11.5 million bpd, and in 2021 it will fall to 11.1 million bpd. At the meeting (Joint Technical Committee), OPEC representatives noted the risks of the coronavirus pandemic and increased oil production in Libya. They reported that prospects for the oil market would continue to be discussed at the next meeting on November 30 - December 1. Meanwhile, the OPEC + decision to increase production by 2 million bpd in January 2021 remains in force.

Gold Market News

Gold prices dropped on Friday but rose today. The weakening of the US dollar still supported the precious metals quotes. The psychological level of $1,900 per ounce of gold again became a support level.