Forex Today: Markets licking their wounds from covid-related rout, US data eyed

Here is what you need to know on Tuesday, October 27: Markets are recovering and the dollar is edging lower after covid concerns and realization that  |  27/10/2020 07:07

Here is what you need to know on Tuesday, October 27: 

Markets are recovering and the dollar is edging lower after covid concerns and realization that US fiscal stimulus is not coming hit markets. Speculation about the elections, two significant US releases, and additional coronavirus statistics are eyed. 

The dollar is attempting a recovery and S&P 500 futures are advancing after the index fell by 1.86% on Monday. The rout was triggered by growing concerns about increasing coronavirus cases in Europe and the US. Restrictions imposed across the old continent have yet to result in meaningful drops in infection rates.

German Chancellor Angela Merkel told the nation that difficult months are coming and is reportedly considering a light form of lockdown. The German IFO Business Climate declined in October despite the country's relatively moderate hit from the second wave. France, Spain, Belgium, and the Netherlands are struggling. Tensions are rising ahead of Thursday's European Central Bank decision.

US COVID-19 cases came out lower than in previous days in Monday's report, typical to weekend figures. Several states are reporting strains on hospitals. 

The US Congress is now adjourned until after the elections, seemingly slamming the door shut on the chances for an accord of fiscal stimulus and weighing on markets. Senators approved Amy Coney Barrett to the Supreme Court, in a move strengthening the conservative majority in the nation's highest court, and ahead of what could turn into a contested election.

President Donald Trump continues trailing rival Joe Biden in national and state polls, with no significant bounce from the debate. FiveThirtyEight is pointing to an 87% chance for the Democrat, and The Economist is pointing to 95% as post-presidential polls emerge.

See: US Elections: Debates matter but how much?

The race to control the Senate is closer and remains critical to passing a significant stimulus package. Investors prefer a Democratic sweep due to stimulus and despite the potential for business-unfriendly politics. 

The economic calendar features two significant releases. First, Durable Goods Orders for September are forecast to show a moderate increase in investment. The data feeds into third-quarter Gross Domestic Product statistics published later in the week. See: 

US Durable Goods Orders Preview: Will the part reflect the retail whole?

Later, the Conference Board's Consumer Confidence report for October is projected to show a moderate increase, signaling stability in consumption. Concerns about the elections could also surface. 

WTI Oil remains under the $40 level but has clawed its way back up. 

Gold is also moving back up, topping the $1,900 level but largely staying in familiar ranges. 

Bitcoin has extended its stabilization phase, holding above $13,000, while Ethereum slipped below $400. 

See 2020 Elections: Seven reasons why this is not 2016, time to focus on the Senate

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