Donald Trump has announced on Twitter that he and his wife, Melania Trump, tested positive for coronavirus. Most likely, this happened after contact with White House adviser Hope Hicks, who contracted the virus as well, but a bit earlier. Both Trump and his wife are now undergoing treatments, nonetheless, this news has not affected the market in any way, especially since Trump’s condition is excellent.
Meanwhile, the ongoing conflict within the European Union over the distribution of recovery funds on member states hinders the euro from resuming its earlier bullish momentum. Officials say that if disagreements regarding this issue persist, a delay could occur in their use. The original plan is to distribute and spend the fund as early as January 1, 2021. Thus, the EUR / USD pair remains trading in a flat market, and only a breakout from the level of 1.1755 will bring the quote a large upward move, in the direction of 1.1800 and 1.1840.
However, a decline could occur if the pair drops below a quote of 1.1710, in the direction of lows 1.1660 and 1.1610. In another note, the US House of Representatives approved a new stimulus program, which amounts $ 2.2 trillion. However, the Senate expressed their dissent on the package, particularly the side of the Republicans. So, as a result, negotiations fell through, but it would still continue a little later.
With regards to macroeconomic statistics, the US labor market continues to recover, as indicated by decreasing jobless claims all throughout the country. According to the report of the US Department of Labor, initial applications of unemployment benefits fell by 36,000 on the week of September 20-26, amounting to only 837,000. As for unemployment rate, a drop to 8.2% is expected on the record for September, and this is largely due to increasing employment in the US private sector.
According to a report, jobs in the non-agricultural sectors of the United States is projected to grow by 850 thousand, and if it coincides or maybe even turn out better than the forecast, demand for the US dollar will significantly increase in the market. Personal expenses of Americans also jumped in August, according to the recent report by the Department of Commerce. However, the concerning situation is that income has decreased, so households may be forced to save money in the future.
Nonetheless, as of the moment, personal spending climbed to 1.0% in August, up from economists’ forecast of 0.9%. Meanwhile, personal income fell 2.7% from the previous month, and this is due to the expiration of some government assistance to the unemployed.
Another indicator, which characterizes activity in the US manufacturing sector, showed a slight decline in September compared to August. The report published by the Institute for Supply Management said that the PMI for the manufacturing sector fell to 55.4 points this September, against its 56.0 points from last month. Regardless, such a statistics can still be considered as an improvement, especially since the indicator remains above the 50-point mark.
GBP / USD About the British pound, volatility continues to rise, and this is due to uncertainties regarding Brexit. Continuous deadlock on the UK-EU trade agreement has led to a sharp drop in the pound. However, just recently, European Commission president, Ursula von der Leyen, said that the EU wants to conclude a deal with the UK, but on the condition that London abandons the controversial internal markets bill. Such brought back optimism to traders, especially since it renewed the hope that an agreement would be signed between the two countries.
But if the UK pursues the aforementioned bill, President von der Leyen said that the EU will send a formal notification to the UK, which will be the first step towards litigation regarding the law on the internal market. As for the technical picture of the GBP / USD pair, large upward movement was seen from the support level of 1.2820, which suggests that large players are present at this level. In addition, an upward correction may continue if certain conditions are met, and this is a breakout from the resistance level of 1.2900. Such a scenario will enable the pound to reach a quote of 1.2980, and then 1.3090. But, if it breaks out below the support level of 1.2820, the pair will collapse to last week’s lows at 1.2750 and 1.2690.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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