USD may rise after Trump calls for post-election delay in stimulus talks

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Elections 2020, USD, Trump, US Fiscal Stimulus Package – Talking Points

  • Trump calls for fiscal stimulus talks until after election markets pay the price
  • Biden-Trump spread is largest on record before vice-presidential debate
  • Alignment of AUD / USD fundamentals and techniques – where is the pair heading?

28 DAYS UNTIL THE PRESIDENTIAL ELECTION OF THE UNITED STATES

There are officially four weeks until the US presidential election, and political volatility around the situation continues to increase. President Donald Trump was recently released from Walter Reed Medical Center, where he was temporarily being treated for Covid-19. Despite his early return to the White House, recent poll data points to a landslide victory for Democratic candidate Joe Biden.

2020 U.S. election polls

Source: RealClearPolitics

Following the first presidential debate on September 29, the gap between Mr. Biden and Trump widened to 25.5, the largest divergence on record between the two candidates. With the next Vice Presidential Debate on October 7, that momentum will likely be amplified if Biden Vice President Kamala Harris outshines Vice President Mike Pence.

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Fiscal stimulus talks collapse, drag markets with them

On Tuesday, U.S. President Donald Trump announced he was ordering key officials in his administration to cease all fiscal stimulus negotiations with Democrats until the November 3 election ends. investors were betting that the atmosphere of urgency for more aid would force Republicans and Democrats to work together.

That kind of sentiment worked with Europe when the North-South rift was temporarily set aside for greater unity, and perhaps investors believed the same political dynamic would occur in the United States. House Democrats passed a $ 2.2 trillion stimulus package last week, but the bill has encountered friction from Republicans who fear such a stimulus will further inflate the national debt .

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Why the market reaction to news of the breakdown of talks between congressional lawmakers has elicited such a strong response reflects the urgency of the need for a stimulus. The latest package’s growth-boosting provisions are running out of steam or have already expired, leaving the economy to run on fumes as cases soar and the need to re-impose lockdowns increases. In this uncertain environment, the safe haven USD could rise.

AUD / USD Price Analysis

Perhaps not entirely by chance, the fundamental backdrop fits perfectly into the technical narrative. AUD / USD has hovered at the lower level of a key inflection range between 0.7206 and 0.7181 and is now showing signs of capitulation. The pair saw its biggest drop in a day since the sell fight in September and can now test support again at 0.7018.

AUD / USD – Daily chart

USD may rise after Trump calls for post-election delay in stimulus talks

AUD / USD chart created using TradingView

– Written by Dimitri Zabelin, Currency Analyst for DailyFX.com

Contact Dimitri, use the comments section below or@ZabelinDimitrisure Twitter



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