US Stimulus: Talk of The Town
US Stimulus was the talk of the town last week as US House speaker Pelosi remained keen to put together a package that will be sustainable and offer support for a number of small business that have been shattered by the effects of Covid-19. Trump who initially put an end to discussions until after the elections has now seemed to have turned the other way as the White House proposed a somewhat limited deal over the weekend.
US equity markets
US equity markets closed the week higher after Trump was given the all clear that he is no longer considered a transmission risk to others by White House officials. This will bode well for the president as he intends to be on the road every day until the elections on November 3rd. A constructive risk tone and weaker greenback pushed EURUSD back above the 1.1800 handle whilst the DXY dipped lower to hold just above 93.00. Going into the week ahead, Covid-19 cases continue to surge with PM Johnson set to outline the nations new restriction plans in a COBRA meeting later today.
The October 15th deadline comes into focus this week as the UK are set to continue talks with the EU as they try to finalise a deal. PM Johnson has reiterated that progress must be made this week though has also outlined that the UK is prepared to end the transition period with an Australia-style agreement if a deal is not reached. EU leaders are set to insist on tougher enforcement of any UK trade deal as PM Johnsons initial move to override the Brexit treaty has sparked some mistrust across the EU leaders. Major sticking points still include fishing rights and creating a level playing field. Last week, EURGBP continued to reject 0.9150 and continues to trend lower within its bearish counter channel on the Daily Timeframe. Cable also looks poised to potentially press higher after violating the 1.3000 handle last week for the time in weeks.
WTI crude gained close to 10% last week after the commodity appreciated on the global risk tone. The asset drove higher after Hurricane Delta led to production shutdowns in the Gulf of Mexico. Prices have somewhat stabilised going into the week after the adverse weather conditions calmed over the weekend. The commodity met levels of previous resistance around $41.44/bbl. going into the weeks close and currently holds just above its 8 & 21 EMA at $39.87. Going into the week ahead production looks set to soon resume in Norway as the oil strikes draw to an end. This came after Norwegian oil firms struck a wage deal with labour union officials on Friday. In addition to this, production in Libya is set to increase after their largest oil field; El-Sharara looks set to resume production. Reports suggest that the aim is to initially pump 40K BPD; just over 13% of its maximum capacity. This would lead to the total production within the nation increasing to 355K BPD from 290K BPD last week.
A progressively weaker dollar reignited bullion’s move higher as the asset closed above the $1,900 handle last week. Price currently holds at a bearish trendline with the next key resistance level being around $1,960. The commodity has appreciated by just over 2% so far this month with the US election drawing nearer.
Within the cryptocurrency space, volatility has picked up as BTCUSD broke above the $11,000 handle, gaining over 6% last week. The Cryptoasset currently sits at $11,370 after violating a tentative bearish trendline. Similarly, ETHUSD grinded higher to break above the $365 level though $390 still remains a key area of resistance for the asset. BCHUSD and XRPUSD still remain subdued beneath their respective resistance levels as buyers attempt to push the assets higher going into the week.
Here is a breakdown of the high impact data releases this week.
All Day Bank Holiday – US / Canada
10:45 RBA Gov Lowe Speaks. Markets to watch: AUD Crosses
01:30 Employment Change/Unemployment Rate. Markets to watch AUD Crosses
13:30 Core Retail Sales m/m & Retail Sales m/m. Markets to watch USD Crosses