Walid Salah Eldin
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The US equities future rates rose and also the demand for loading risks during the first Asian session of this week, after Trump blessing of Oracle Tik Tok deal. The deal lowered the pressure on the technology sector which attracted the markets attention by its slide during the last 3 weeks.
The deal looked short of his demand but looked eager to support the equities anyway right now. So, Nasdaq 100 future rate approached 11000 psychological level again, following diving during the last US session of last week to 10765, while Nikkei 225 could rise to 23360.
The demand for risky assets lowered the demand for USD sending GBPUSD higher to be traded near 1.2950, As it seemed to the investors that there is no serious need for further liquidation yet and the US equities can find again its upward track soon!
While the pledges are coming from both of Trump and Biden sides to give to support the markets but anyway, it is still looking to the investors that Biden's winning an end to US trade wars and this can be enough to send their risk appetite higher and higher.
In the same time, Trump's winning is not that bad issue that can threat the equities markets, as he could support the economy and create jobs by reflation plans worth $1.5 trillion and looked unneeded in the beginning of his period but later they were useful to curb the economic easing down and he could also put pressure on the Fed to adopt very easy policies.
Trump criticized the Fed raising rates action strongly by the end of 2018 and he called for changing the 2% target inflation policy of the Fed and make it higher to 3% to pave the way for longer period of adopting easy policy to support the economy and he named the Fed the enemy of this economy as it erodes his efforts to support the economy.
Now the Fed is in line of all of these and the FOMC members expressed last week that they are open to adjust the monetary policy further as needed by using all of its tools to support economic recovery, while the economic recovery remains on track and vaccine hopes are rising.
But they suggested that they will remain on pause for now and they shifted to an average inflation target accepting higher inflation rates to come above 2% before moving higher of rates to compensate the periods of lower inflation rates during the economic struggling because of Corona virus.
The committee lowered the inflation outlook to 1.0% from 1.5% they expected in June and they expect US GDP to contract annually by only 3.7% not by the 7.6% they expected in June and they expect the unemployment rate to fall to 7.6% at the end of 2020 comparing to 9.3% they were expecting in June.
While the Fed fund rates are expected to hold unchanged for next 2 years and the Fed's Chief Powell suggested that the Fed's actions may to be enough but the fiscal support may be needed.
The demand for equities looked more fragile, after this statement which suggested that the Fed sees no need for more liquidity to be pumped to the economy shortly and So, The equities became more vulnerable to the downside with no more expected Fed's backing to come.
From other side, the economic data disappointed the markets last week, as US Retail Sales figure of august has shown rising by only 0.6% monthly, while the consensus was referring to 1% showing how the consumption can be negatively impacted by the end of the supplementary $600 weekly unemployment support with continued rising of COVID-19 cases.
While the Senate Republicans are still on their substantially scaled-back stimulus plan can worth only 1 trillion and their Dems counterparts are still looking forward for what's more than $2.2 trillion to address the economic devastation of the pandemic, scaling back the odds of reaching deal by the presidential elections.
Have a good day
Kind Regards
Global Market Strategist of FX-Recommends
Walid Salah El Din
The deal looked short of his demand but looked eager to support the equities anyway right now. So, Nasdaq 100 future rate approached 11000 psychological level again, following diving during the last US session of last week to 10765, while Nikkei 225 could rise to 23360.
The demand for risky assets lowered the demand for USD sending GBPUSD higher to be traded near 1.2950, As it seemed to the investors that there is no serious need for further liquidation yet and the US equities can find again its upward track soon!
While the pledges are coming from both of Trump and Biden sides to give to support the markets but anyway, it is still looking to the investors that Biden's winning an end to US trade wars and this can be enough to send their risk appetite higher and higher.
In the same time, Trump's winning is not that bad issue that can threat the equities markets, as he could support the economy and create jobs by reflation plans worth $1.5 trillion and looked unneeded in the beginning of his period but later they were useful to curb the economic easing down and he could also put pressure on the Fed to adopt very easy policies.
Trump criticized the Fed raising rates action strongly by the end of 2018 and he called for changing the 2% target inflation policy of the Fed and make it higher to 3% to pave the way for longer period of adopting easy policy to support the economy and he named the Fed the enemy of this economy as it erodes his efforts to support the economy.
Now the Fed is in line of all of these and the FOMC members expressed last week that they are open to adjust the monetary policy further as needed by using all of its tools to support economic recovery, while the economic recovery remains on track and vaccine hopes are rising.
But they suggested that they will remain on pause for now and they shifted to an average inflation target accepting higher inflation rates to come above 2% before moving higher of rates to compensate the periods of lower inflation rates during the economic struggling because of Corona virus.
The committee lowered the inflation outlook to 1.0% from 1.5% they expected in June and they expect US GDP to contract annually by only 3.7% not by the 7.6% they expected in June and they expect the unemployment rate to fall to 7.6% at the end of 2020 comparing to 9.3% they were expecting in June.
While the Fed fund rates are expected to hold unchanged for next 2 years and the Fed's Chief Powell suggested that the Fed's actions may to be enough but the fiscal support may be needed.
The demand for equities looked more fragile, after this statement which suggested that the Fed sees no need for more liquidity to be pumped to the economy shortly and So, The equities became more vulnerable to the downside with no more expected Fed's backing to come.
From other side, the economic data disappointed the markets last week, as US Retail Sales figure of august has shown rising by only 0.6% monthly, while the consensus was referring to 1% showing how the consumption can be negatively impacted by the end of the supplementary $600 weekly unemployment support with continued rising of COVID-19 cases.
While the Senate Republicans are still on their substantially scaled-back stimulus plan can worth only 1 trillion and their Dems counterparts are still looking forward for what's more than $2.2 trillion to address the economic devastation of the pandemic, scaling back the odds of reaching deal by the presidential elections.
Have a good day
Kind Regards
Global Market Strategist of FX-Recommends
Walid Salah El Din
