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Virus Situation Continues to Worsen

More government stimulus to support the economy becomes increasingly necessary as time passes.


  1. Gold & Silver — Strong support for Gold is at 1850–60 and for silver is at 21.80–90. Traded weak and looked like there was going to be another wash-out but recovered strongly. Positive price action is encouraging, stay on course!


Market Movements as of New York Close 16 Oct 2020
  • The U.S. budget deficit hit a record $3.132 trillion during fiscal 2020, more than triple the 2019 shortfall, as a result of massive coronavirus rescue spending, the U.S. Treasury said on Friday.
  • Dollar edged lower (-0.19%) against a basket of currencies on Friday, paring some of the week’s gains (+0.67%) built on increased caution over a global surge in coronavirus cases and fading prospects for a U.S. stimulus package before the Nov. 3 election. Fresh restrictions to combat COVID-19 have been introduced across Europe, and the U.S. Midwest is battling spikes in new cases, threatening to derail the country’s economic recovery from the coronavirus shock. The safe-haven JPY was headed for a weekly gain of 0.2% against the greenback as investor appetite for safe haven assets remains strong. GBP erased the bulk of its early gains (+0.38%) to trade slightly higher on the day in a choppy session on Friday, after British Prime Minister Boris Johnson told businesses to get ready for a no-deal Brexit.
  • S&P 500 (+0.01%) finished little changed on Friday after being up as much as 0.9% early in the day. The Dow Jones Industrial Average outperformed with a 0.4% gain, while the Nasdaq Composite (-0.4%) and Russell 2000 (-0.3%) slipped into negative territory as selling picked up into the close on no specific news.
  • The weakness in the transportation space was mitigated in the industrials sector (+0.7%) by nice gains in Boeing (BA 167.35, +3.11, +1.9%) and Caterpillar (CAT 168.75, +3.71, +2.3%). Boeing’s 737 MAX was deemed safe to fly by EU regulators, and CAT was upgraded to Overweight from Equal Weight at Wells Fargo.
  • Prime Minister Jacinda Ardern’s centre-left Labour Party won a landslide victory in New Zealand’s general election on Saturday as voters rewarded her for a decisive response to Covid-19. The mandate means Ardern, 40, could form the first single-party government in decades, and face the challenge of delivering on the progressive transformation she promised but failed to deliver in her first term, where Labour shared power with a nationalist party. Labour was on track to win 64 of the 120 seats in the country’s unicameral parliament, the highest by any party since New Zealand adopted a proportional voting system in 1996.
  • Of Ardern’s current coalition partners, the nationalist New Zealand First Party had 2.6 percent and the Green Party 7.6 percent. If she is unable to form a Labour-only government, she is expected to continue to rely on the minor Greens. A Labour-Green coalition would be the first fully left-leaning government since the 1970s, a scenario that would mean more taxes and an environment hostile to business. NZDUSD popped 0.19% on Monday’s open.




The virus reality has come back to bite markets just as investors were attempting once again to shrug off the gloom and doom. The daily frequency of tighter Covid restrictions being announced across Europe and dimming expectations of a pre-election stimulus deal by US lawmakers has put a dampener on risk sentiment over the past few days. Uncertainty about the US election and Brexit are adding to the market anxiety. With none of these outstanding issues expected to be resolved over this week, traders might have to make do with the flash PMIs for October for some guidance.



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Phan Vee Leung
CIO & Founder, TrackRecord



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