$2.2 trillion from Democrats

Financial and commodity markets analytics

Market Watch review. 25.09.2020

In today's release, we’ll cover the following topics:

  • Phase 3 of COVID-19 vaccine testing.
  • Another stimulus package in the USA.
  • Increase in home sales in the US primary market.
  • Analysis of a AUD/USD sell deal.

From time to time, the focus shifts to various local issues, such as the ban on Tiktok and WeChat, or sanctions against companies from other countries. But COVID-19 remains a key issue. So the increasing risk of tightening quarantine in Europe continues to put pressure on European currencies, but there is still no panic, because the British company Novavax has already begun the third phase of testing its vaccine.

Accordingly, we get two incredibly strong fundamental factors that almost completely cancel each other out. Most likely for this reason, the volatility of the EUR/USD currency pair remains moderate. But at the same time, I still do not exclude the risk of further weakening of the pair quotes to 1.1590 and further to 1.1540.

Moving to the American trading session, I will note a very similar situation. On the one hand, for most of the week, we heard from the governor of the Federal Reserve about the problems in the labor market and unsustainable economic growth. All this put pressure on the stock market, but the emergence of information that the Democrats are working on the next bill on the allocation of $2.2 trillion has noticeably weakened the activity of sellers of shares of American companies.

No less remarkable is the fact that the US continues to publish multidirectional statistics, thereby increasing uncertainty. Thus, a significant increase in home sales in the primary market fully compensated for the negative associated with an unexpected increase in the number of initial applications for unemployment benefits. Essentially, the US home sales report brought buyers back to the stock market.

I will conclude today's review with an analysis of a AUD/USD sell deal. After breaking the support at 0.7200, a short position was opened. Take Profit order was placed at 0.7040 - this is the closest technical support level. The profit on this trade was $1600.

Closely monitor the news background and be prepared for all the surprises of the market.