Dollar Threaded Lower Ahead of Chinese Quarterly Growth Data Release 

  • On Monday morning in Asia session, the dollar threaded lower, with China due to release quarterly growth data, including GDP and industrial production reading, later in the day, despite fading hopes for the latest fiscal stimulus package to be passed by the U.S. Congress ahead of the Nov. 3 U.S. presidential elections.  

    The U.S. Dollar Index inched down 0.04% to 93.672 by 9:40 PM ET (1:40 AM GMT), following a 0.7% rise the previous week over surging number of COVID-19 cases and the impasse in Congress.  

    In the U.S., despite House of Representatives Speaker Nancy Pelosi setting a Tuesday deadline for Congress to reach consensus on a deal before the election, most investors remain doubtful that the deadline will be reached as a Joe Biden victory looks imminent. 

    “Fiscal remains the buzzword … but forget the Republicans’ move to pass a $500 billion bill, it will not see the light of day, and expectations of a new stimulus bill have been pushed into 2021,” Pepperstone head of research Chris Weston told Reuters. With around two left until Nov. 3m national polls show Democrat candidate Biden leading incumbent President Donald Trump by around ten points. The two men will square off at a final debate scheduled for Thursday. 

    “Markets will be attentive to any potential shifts in polls, although traditionally the last debate has less impact in public opinion … the main risk for markets now would be a tightening in polls, which would reduce the likelihood of a large Democratic fiscal stimulus package and could raise the likelihood of a long-contested election,” Barclays analysts said in a note. 

    Meanwhile, Pelosi and Treasury Secretary Steven Mnuchin discussed stimulus package efforts via a phone call on Saturday and are due to speak again later in the day. Trump has also renewed his offer to up the package’s price tag. 

     

    TECHNICAL OUTLOOK 

     

     In the daily charts of GBP/USD, the pair gained early Monday morning in Sydney session.  

    The GBP/USD pair edged up 0.20% to 1.2938. The U.S. Dollar Index inched down 0.04% to 93.672 by 9:40 PM ET (1:40 AM GMT), following a 0.07% rise the previous week over surging number of COVID-19 cases and the impasse in congress. 

    As what we can see in the daily charts of GBP/USD, the pair is still trading inside the area of support at 1.2688 and resistance level at 1.3476. With the uncertainty of investors in the U.S. dollar, they are now looking for other safe-haven currencies.  

    Despite the negative economic outlook of U.K. due to the uncertainty of Brexit and the resurgence of COVID-19 and re-implementation of lockdowns, the sterling seems to be gaining from the losses of USD. 

    Further confirmation of the gains of the sterling will be re-assured on the coming trading days this week as talks of an imminent win of Joe Biden will further damage the dollar. 

     

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