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Today, the most awaited US presidential elections in history will take place. However, the intrigue remains, although according to the polls, Biden was in the lead in the early voting that happened a week ago.
Stocks markets reacted with a rise in stock indices yesterday. It seems that investors believe that the worst has already happened for the markets. In addition, markets are confident that the Democrats, led by Biden, will win, which investors consider as a positive signal. If we look at the general outlook, we believe that if he really wins, this may become the basis for a strong rally in the stock market in America and, as a result, in Europe and Asia. In any case, this is exactly what investors think.
The US dollar, in turn, is already done being strong in the currency market, which entirely fits into the above paradigm: If Biden wins, the demand for risky assets will rise, which means that the US currency should be expected to weaken.
Today, the Central Bank of Australia decided to lower the key interest rate to 0.10% from 0.25%. They also discussed the package of further measures to restore the Australian economy after the pandemic.The regulator also expanded the volume of government bond purchases and reduced lending rates for new borrowers.
Nevertheless, today's focus of the market is still directed to the US elections, which overshadowed all important events, including the publication of economic statistics, to which the markets basically ignored for almost a month.
Yesterday, Manufacturing PMI data in Germany, Eurozone, UK and the US were better than expected. On this wave, the European stock market surged and greatly increased, while the euro, accompanied by the pound also turned up after a local decline against the dollar.
In terms of expectations for the election, we believe that Biden's victory will lead to a rally in the stock markets and push the dollar down. On the contrary, if Trump remains the president and uncertainty begins in the country, which can include kinds of chaos, then in this case, the US dollar may begin to be in demand again as a key currency.
Forecast of the day:
The EUR/USD pair is showing a local reversal with the ability to continue the local growth to 1.1700 on a wave of cautious optimism.
The USD/JPY pair has consolidated above the level of 104.65. Growing positive mood will put pressure on the yen as a safe haven currency. In this case, the pair may rise to 105.05.
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