TRACKRECORD DAILY
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TRACKRECORD DAILY

Directionless with a Tinge of Weakness

Traders are likely to remain cautious as the clock for a stimulus deal before the election continue to run down

TRADING PLAN

  1. Gold & Silver — Strong support for Gold is at 1850–60. For silver, major support is at 21.80–90 with minor support at 23.50–60. Precious metals, especially Silver, are trading on the backfoot despite the general USD weakness. Caution is required if this should persist.

WHAT HAPPENED YESTERDAY

Market Movements as of New York Close 23 Oct 2020
  • Dollar weakened slightly against a basket of major currencies on Friday amid uncertainty over a new round of stimulus ahead of the upcoming U.S. elections, with the greenback set to record a weekly decline of 0.98%. U.S. House of Representatives Speaker Nancy Pelosi said another round of COVID-19 aid was still possible before the Nov. 3 elections, but that President Trump would have to get reluctant Republicans on board if he wants a deal. Trump and Treasury Secretary Steven Mnuchin countered that Pelosi must compromise to get an aid package, saying significant differences remained between the Republican administration and Democrats. In Europe, business surveys in France and Germany showed the impact of the second wave of COVID-19 infections in the eurozone’s two biggest economies, threatening to derail the bloc’s nascent recovery. Despite the data (EU Flash Services PMI 46.2 vs Exp 47.1), the EUR edged higher 0.34% against the greenback to $1.1859. CNH continued its rise against the Dollar (USDCNH, -0.05%) after comments from a Chinese official suggested authorities are not too worried about its recent rise.
  • The underperformance of the Dow was linked to weakness in Intel (INTC 48.20, -5.70, -10.6%) and American Express (AXP 100.99, -3.80, -3.6%) following their earnings reports. Intel warned about operating margin next quarter, and the 10.6% post-earnings decline pressured the top-weighted S&P 500 information technology sector (-0.1%).
  • Gilead Sciences (GILD 60.79, +0.12, +0.2%) received FDA approval for its remdesivir drug used to treat COVID-19. Shares spiked 5% on the news but ended the session with a 0.2% gain in a sell-the-news reaction.
  • Japan’s government is considering compiling an extra budget worth around $95.5 billion to offset the economic drag caused by the coronavirus pandemic, the Mainichi newspaper reported on Saturday. The government is likely to debate using the 10 trillion yen ($95.52 billion) budget to extend a labour subsidy programme scheduled to end in December and to pay for the distribution of a coronavirus vaccine, the Mainichi reported, without citing sources.
  • China’s top leaders will chart the country’s economic course for 2021–2025 at a key meeting (Oct. 26 to 29) starting on Monday, and may adopt a lower or more flexible growth target. The focus will be on what President Xi has called the “dual circulation” strategy, rebalancing toward China’s domestic market — according to leadership, to “facilitate better connectivity between domestic and foreign markets for more resilient and sustainable growth.” The challenge for China in presenting its 14th Five-Year Plan, founded on science and technology, is to show the world why all should root for, not against, its success. Keep a lookout for headlines pertaining to the “Green Narrative” i.e. ESG mandates (Environmental. Social. Governance).

HEADLINES:

U.S. SEES HIGHEST NUMBER OF NEW COVID-19 CASES IN PAST TWO DAYS

WEEK AHEAD

With less than two weeks to go until the US elections, markets are on red alert as opinion polls in key battleground states have tightened. In the meantime, there are three central bank meetings and a ton of data to keep things exciting. The ECB could steal the show by opening the door for more stimulus, to negate the risk of a double-dip recession as the virus rampages through Europe. The central banks of Canada and Japan will meet too, third-quarter GDP is out in America, the Brexit saga continues, and most of the tech world reports earnings.

SENTIMENT

FX

Market Observation

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Best,
Phan Vee Leung
CIO & Founder, TrackRecord

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