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CNY jumps on rising chance of Biden win

AUD/USD – 4hr Candlesticks
Source: GKFX / MT4 (October 11, 2020)

The AUD/USD broke above double top resistance at 0.72 and has paused at a potential down sloping trendline. Should the trendline break- it is notable that a potential move to the peak on September 1 at 0.74 is equidistant to the move up to the double top from the September 25 low.
 

TAKEAWAYS


•    Chinese yuan soars as investors get ready for Biden election win
•    S&P 500, Nasdaq best week since July, price in ‘blue wave’
•    Norway oil strike ends- oil price turns lower
•    Democrats reject Trump’s raised $1.8 billion stimulus offer
•    DAY AHEAD: China FDI, Lagarde speech, Bailey speech
 

GURU WISDOM


“Formal education will make you a living; self-education will make you a fortune.” - Jim Rohn
 

MARKETS


The US dollar – with its primary function under current market conditions as a haven asset – fell for a second week. As the dollar dropped the Chinese yuan benefitted on expectation that a President Biden would withdraw sanctions against China. GBP/USD broke above 1.30 and EUR/USD closed back over 1.18.

Stock markets remain sensitive to US stimulus negotiations but nonetheless closed out the week higher across the board. Some of the biggest gains on Friday were in China after well-received Caixin services PMI data blew past expectations and as investors caught up from a long holiday week.

The optimism around what a Biden win could mean for China also helped propel mining companies higher to the benefit of the UK’s FTSE 100. Other European markets also finished the week in the green despite a rise in virus cases and new lockdown measures in the UK and France.

The Nasdaq gained 4.6% for its best week since early July. Shares of Xilinx stormed higher by double digits on reports rival chipmaker AMD is planning a $30 billion takeover.

The price of Brent crude oil slipped 1% on Friday after labour unions struck a deal with Norwegian oil companies to bring an end to a 10-day strike that was on the verge of cutting of 25% of the country’s oil output. 
 

CNY & Biden


The US election remains a big source of uncertainty but the mood appears to have shifted since the first debate and the US President catching COVID-19. The polls have shown Joe Biden extend his lead since these two events and there’s a belief that momentum behind the Democratic Party could see it make a clean sweep of all the house of government.

Former VP Joe Biden has said he would rollback sanctions against China and although he said he would take a tough stance against the country- it’s not clear how that would take shape. With China already the only major economy set to grow this year, it’s thought the removal of sanctions would set the country up for a big year of growth in 2021.
 

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