IFX Market Report: Friday 6th November 2020

With the definitive outcome of the U.S. election still not apparent, the Dollar has softened as Biden leads Trump in electoral votes with ballots in several key states still yet to be counted. The Dollar Index sank to 92.47 early this morning, a low index has not seen since the start of September.

After a non-eventful FOMC meeting yesterday, markets are still incredibly volatile as it looks like Democrat Joe Biden will become the next President of the United States while Republicans will retain control of the senate. GBPUSD was again able to make gains in yesterday’s session – opening at 1.3016, the pair steadily moved into the 1.31 range, finally closing the day off almost a cent higher at 1.3115.

Similarly, EURUSD was also able to gain some upside on Thursday session, with the pair closing above the 1.18 handle. The pair was trading at 1.1758 at the open but by midday (GMT) had managed to climb into the 1.18’s. After a jittery afternoon, the pair was able to close at 1.1808 and this morning is trading even stronger at 1.1847 (09:54 GMT).

As the BoE announced that interest rates would remain the same and the central bank would up their bond buying programme, we saw the pound strengthen against the Euro. GBPEUR opened the session at 1.1070 and was able to surpass the 1.11 mark by the close, finally finishing the day at 1.1106.

The BoE announcement came just before Chancellor Rishi Sunak announced that the UK government will be extending the furlough scheme until the end of March. Sunak confirmed that payments would remain at 80% of people’s wages (capped at £2,500 pcm), with a review of the policy in January. Sunak stated that review would “decide whether economic circumstances are improving enough to ask employers to contribute more”, noting that government’s “highest priority remains the same: to protect jobs and livelihoods”.

On the data front, we have a number of ‘normally’ key US economic releases which will likely go unnoticed today as the US edges closer to electing a President. Starting at 13:30 we have Non-Farm Payrolls, Unemployment Rate, Average Earnings, Average Weekly Hours and Participation Rate. Then at 15:00 we have Wholesale Inventories, followed by Consumer Credit Change at 20:00.

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