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USD hit by chance of unknown election result

Apple – Daily Candlesticks
Source: GKFX / MT4 (September 20, 2020)

Apple stock has fallen just over 20% from its record high, officially entering a bear market. The drop coincides with a rising trendline from the March low, which offers potential technical support.


•    US stocks fall for 3rd week
•    Apple stock enters bear market (-20%)
•    Trump agrees to TikTok deal with Oracle, judge halts WeChat ban
•    Dollar closes week lower after Fed amid election uncertainty
•    DAY AHEAD: Fed’s Powell, Brainard, Williams speeches


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


The US dollar fell in the wake of the FOMC meeting since the Fed’s message still appears to be more dovish than other central banks, despite raised economic forecasts. Perhaps one exception is the Bank of England, which again said it was reviewing negative interest rates, which weighed on the British pound. Amid the dollar weakness and a change of leadership in Japan, the Japanese yen rose to a 7-week high (USD/JPY 7-week low). 

Wall Street fell for a third week amid volatile trading that saw big swings in the major averages. The ongoing pullback in tech stocks dragged Apple shares into bear market territory – down 20% from their peak. European markets dropped amid concerns around the highest weekly total in coronavirus cases since the pandemic peaked in April. Shares in Shanghai finished Friday with solid gains in a week that saw Chinese retail sales return to annual growth.

Having slumped following the Fed meeting, gold rebounded on Friday to finish its second week in the black. Oil prices enjoyed a big return to form, bolstered by the promise of more vigilance at OPEC with supply cuts.

TikTok & WeChat

The good news was twofold for Chinese tech firms TikTok (owned by ByteDance) and WeChat (owned by Tencent). Donald Trump indicated he would approve the data-management deal that TikTok struck with Oracle, though there is no word yet from Beijing. On top of that, the TikTok and WeChat apps were both due to removed from app stores by today but because of the deal, Trump has delayed it for TikTok and a judge has blocked the WeChat order.

USD: Powell / election

The US dollar initially jumped after the Fed rate decsion but then backtracked on the same day, leaving a big one-day reversal (or hammer pattern)in EUR/USD. The Fed still has the more aggressive stance toward monetary policy than other central banks and Chair Powell is unlikely to try to indicate otherwise in his speech today. 

The other factor for the USD is politics with the US election now just 5-weeks away. There is a rising belief that with narrowing polls and a bigger-than-usual reliance on postal voting that the final result could get signifcantly delayed, adding a high level of uncertainty to markets.