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US Dollar Chart

Chart created with TradingView[1]

Fundamental Outlook: BULLISH

  • US Dollar[2] may be at the mercy of political volatility from presidential debate, stimulus talks
  • Greater election-related uncertainty, concern about timely aid package could hurt sentiment
  • Slew of key employment data could dampen outlook for economy despite signs of a recovery

First Presidential Debate

Politically-induced volatility from the first 2020 US presidential debate between incumbent Donald Trump and Democratic nominee Joe Biden may spur demand for haven-linked assets like the Greenback. As mentioned in my article previewing the debate[3], while debates have not overwhelmingly influenced voter intention, the unique circumstances of this election – and all that is at stake – may prove differently this time.

For more updates on how politics impacts markets, follow me on Twitter @ZabelinDimitri[4].

If the debate causes a reversal in polling data – in this case, Biden losing his lead or having it significantly narrowed – traders may consider repositioning themselves. This reshuffling of capital to optimize their performance in the new political landscape could push the US Dollar higher if a premium is put on liquidity over returns.

US Fiscal Stimulus Talks

This risk-off dynamic may be amplified if policymakers are unable to find a middle ground and pass a coordinated fiscal stimulus package. Last week at a congressional testimony, Fed Chairman Jerome Powell warned that the downside risk of no further action may be reduced spending and the possibility of a people losing their homes. The prospect of this gloomy outcome may amplify losses in equity markets.

US Dollar Gaining vs AUD, EUR and S&P 500 Futures as Stimulus Talks Break Down, Covid-19 Cases Rise

EURUSD Chart

EUR/USD[5] chart created using TradingView

Having said that, Democrats are drafting a $2.4

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The Logo Story

currensceneFLOGO WHTsquareThough not the oldest form of currency, some form of shell money appears to have been found on almost every continent. The shell most widely used worldwide as currency was the shell of Cypraea moneta, the money cowry.

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