Daily Market Commentary 4th November 2020

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The US election is upon markets and a result will be welcomed, as it removes uncertainty. The Democrats have the advantage going into the polls, but the President has the ‘Big Mo’ (momentum), which may be enough to spark another come from behind victory. The 2016 election victory by Trump sparked a massive rally in equities and if this is repeated, expect the same, which will force the US Dollar lower as risk appetite surges. Equities are surging before the polls close and the Dollar is already plunging, so read the cards where they fall?

The spiraling wave of virus infections across Europe and the USA, have been largely ignored, as the US election is finally decided. The falling Dollar has allowed the EUR to jump to 1.1720, while the GBP has spiked to 1.3050, despite the lockdowns and lack of a EU/UK trade agreement. The US and UK look to have agreed a comprehensive and all-inclusive free trade agreement, set to be signed after the election.

The RBA cut rates by 15 basis points and added a further $100 Billion in ‘QE’. This was under cover of the Melbourne Cup and had little impact on local markets. The US Election will impact these vulnerable local markets. The weaker reserve will force these commodity currencies higher. The AUD has surged above 0.7150, while the NZD reclaimed 0.6700, despite weaker Global Dairy prices.

Fasten your seatbelts for a huge US election result and the massive impact it will have on markets.

Collinson & Co Contact