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Q3 growth figures were overshadowed by prospects of an economic contraction in Q4. The US presidential election, the Federal Reserve monetary policy meeting and the release of the October Nonfarm Payroll report promise tumultuous days ahead in the US, FXStreet’s Chief Analyst Vleria Bednarik briefs. The dollar is up against most of its major rivals ahead of these first-tier events, trading around 1.1635 against the shared currency.

Key quotes

“The second wave of coronavirus is taking its toll in the northern hemisphere, with cases in Europe rising exponentially and the US reaching a record of over 85K new contagions in one day. What gives the greenback an advantage is that the US economy remains open, while in Europe, more restrictions have been announced. Such measures will further delay an economic comeback, and could even mean a steeper downturn.”

“The European Central Bank had a monetary policy meeting on Thursday, October 29, and President Christine Lagarde said that while Q3 GDP data might surprise to the upside, as it actually did, Q4 growth will be on the downside. The Government Council paved the way for additional stimulus in December, announcing they will ‘recalibrate’ all available tools.”

“US President Donald Trump and opponent Joe Biden will see the end of their race on Tuesday. With the economy in trouble within the pandemic context, this particular election will be far noisier than previous ones. Not only because Trump still refuses to say he would accept the results, but also because in some states, the election vote count could take up to two weeks to be completed. Concerns that rioting and civil unrest would escalate in those days are mounting amid the current heated mood that keeps the country divided. Whatever the outcome, turmoil is expected in financial markets with risk-off probably taking over.”

“The US Federal Reserve is having a monetary policy meeting, concluding on Thursday. The central bank is expected to remain on hold, and there are little chances that American policymakers will announce more stimulus coming in the near-term, opposite to what the ECB and other central banks have done these days. However, Powell and company won’t have another choice but to continue pledging to do whatever it takes to support the economy.”

“On Friday, the country will publish the US October Nonfarm Payroll Report. The economy is expected to have added 850K new jobs in the month, while the Unemployment rate is seen decreasing to 7.7% from 7.9%.”