Presidential candidates in the United States faced off another debate yesterday, which turned out calmer and very different from the ones that occurred earlier. The more confident position of Donald Trump returned the demand for the US dollar, and raised it up slightly against other currencies such as the euro and the pound.
At the debate, Donald Trump and Joe Biden offered completely different views on the fight against the coronavirus pandemic, which, of course, was not in favor of the current US president. Trump continued to downplay the severity of the crisis, all while increasing emphasis on a vaccine that is not clear yet when it will be invented. He also gave rosy assessments on the trajectory of the pandemic, even though cases in the US are again rising.
As for Biden, he acknowledged the grim losses from the coronavirus pandemic and warned the people that they must prepare for a more difficult period because another pandemic wave could strike again.
Another hot topic during the debate was family business and financial issues, on which Trump again made unfounded statements against Biden’s son. Biden defended his family with all his might and categorically denied the accusations, all while trying to bring the conversation back to politics.
Both candidates were also asked to talk directly about racism in America, to which Biden said bluntly that institutional racism exists, so tackling racial inequality will be a priority on his administration and his presidential agenda. Trump, meanwhile, continued to bend his line, claiming that he has done more for African Americans than any president since Abraham Lincoln.
Needless to say, Joe Biden is undeniably gaining more and more upper hand against Donald Trump as the election day nears, which limits the upward potential of the US dollar against a number of risky assets.
With regards to economic statistics, one of the data that provided significant support to the US dollar is the report on the US labor market, which, according to the record of the US Department of Labor, improved in terms of jobless claims in the country. The latest data said that initial applications fell by 55,000 and to 787,000 for the week of October 11 to 17.
The report on leading indicators, which was published by the Conference Board, also had a positive impact on the US dollar, especially since the index increased by 0.7% and to 107.2 points in September, while economists had expected it to rise by only 0.6 %.
The situation in the US housing market has also improved amid the availability of credit and almost zero interest rates. Thus, in the latest report of the National Association of Realtors, home sales jumped to a record high in September, increasing by 9.4% compared to the previous month. It currently amounts to 6.54 million homes per year. Meanwhile, if compared to the same period last year, sales increased by 20.9%.
As for the technical picture of the EUR / USD pair, demand for the euro may decline further if the data on the eurozone’s manufacturing and services sectors come out bad or worse than economists’ forecast. For example, the composite PMI runs the risk of falling below 50 points, which will stall the pace of economic growth in mid-autumn this year, which is a bad news for the euro.
If the indicators really turn out bad, the euro will definitely decline, in which it may break out of yesterday’s lows (1.1790) and move further down towards the levels 1.1740 and 1.1685. The price will have a chance to move up only if the data exceeds the forecasts. Demand, meanwhile, will only resume after a breakout from the resistance level of 1.1815, and such will make it easier for the bulls to bring the quote up to the weekly high (1.1875).
GBP / USD
Brexit is again adding pressure on the British pound, especially since the rumors that the UK is ready to make concessions on the trade deal remained just a talk, thereby cooling the ardor of speculative buyers of the pound.
To add to that, the recently published data on UK consumer confidence indicated a decrease in October this year, which is not good both for the economy and the British pound.
The report of GfK said the figure fell to -31 points from -25 points a month earlier, while economists had expected it to be -27 points. The main reason for this decline is the massive increase of COVID-19 incidence across the country, as well as on the new measures of restrictions.
So, for the technical picture of the GBP/USD pair, major support is now seen around the level of 1.3035, however, it is hard to say if the bulls will actively defend it. Most likely, active positions will be set up on the support level of 1.2980, but if the bulls want to return the pair to a bull market, they have to make sure that the quote breaks above the resistance level of 1.3100. Only by this will the pound have a chance to reach a high of 1.3150.