IFX Market Report: Thursday 5th November 2020

With votes still left to be counted, Joe Biden leads the electoral vote by 264 votes, while Donald Trump has 214 (10:13 GMT). For a candidate to win a U.S. presidential election they must attain 270 electoral votes – while Biden has asserted he is confident he will win, Donald Trump made the claim he won long before all votes have been counted. Mr Trump is declaring the election to be “fraud”, claiming on Twitter last night that “there was a large number of secretly dumped ballots as has been widely reported!”. It is worth noting that Trump’s tweets have been labelled by Twitter as “disputed and might be misleading about an election”, suggesting that what Trump is claiming might not be true.

While the world waits for a definitive outcome of the U.S. election, markets have continued to be extremely volatile. After opening at 1.2935, GBPUSD was able to gain some upside in yesterdays session as Joe Biden edged closer to 270 electoral votes. The pair closed above the 1.30 handle at 1.3017, and despite struggling throughout the night, is trading even higher this morning, at 1.3050 (10:29 GMT).

EURUSD also was able to gain some upside in yesterday’s session. The pair opened the day at 1.1674, and closed above the 1.17 mark, at 1.1726. It is also important to note that this morning the pair had a brief spell above 1.18 but was unable to sustain itself at that level.

With all the noise of the election, the latest interest rate decisions from the BoE and the Fed have gone somewhat unnoticed. At 07:00 this morning the BoE left rates unchanged at 0.10% as expected, while the Bank also noted they will increase asset purchases by £150B, to £895B. BoE governor Andrew Bailey maintained that the Bank thinks QE is currently the most effective stimulus tool, despite negative interest rates being in the BoE’s “toolbox”.

At the strike of 07:00 when the BoE meeting started, GBPEUR spiked from 1.1026 to 1.1103 in 26 minutes. The pair was jittery yesterday as it opened at 1.1080 and closed at 1.1100. With Brexit negotiations picking up and the chances of a deal being secured by the end of November looking increasingly likely, we could see some considerable upside for the pair in the days and weeks to come if the latter comes to fruition.

On the data front, the main economic releases of note will be Eurozone Retail Sales at 10:00, followed by the weekly US jobs report at 13:30, consisting of Continuing Jobless Claims, Initial Jobless Claims, Jobless Claims 4-Week Average. Then at 19:00 we have the Fed’s latest policy decision, with rates expected to stay as they are and its pandemic relief and loan programmes to also remain unchanged.

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