Global risk appetite continued to sour this past week. In the United States, the Dow Jones and S&P 500 declined while the tech-heavy Nasdaq Composite managed to inch out a cautious rise. The haven-linked US Dollar outperformed its major peers, seeing its best 5-day performance in about 6 months. This likely weighed against anti-fiat gold prices.
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Investors might have been growing increasingly impatient with a lack in expediency of additional US fiscal stimulus. At a congressional testimony, Fed Chair Jerome Powell stressed the need for further support from the government. Still, volatility cooled into the end of the week. The VIX ‘fear gauge’ failed to accumulate material upside momentum.
Might volatility pick back up? This coming week is certainly filled with event risk. All eyes will turn to the US House of Representatives where the chamber may vote on a $2.4 trillion fiscal package. This is as Donald Trump takes on Joe Biden on Tuesday during the first presidential debate ahead of what is likely to be a tense election come November.
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The Euro has been seeing some selling pressure, particularly as coronavirus cases in parts of Europe pick up pace. Might the British Pound regain some lost ground as the EU and UK head into another round of Brexit talks? All eyes at the end of the week turn to the US non-farm payrolls report. Chinese manufacturing PMI will also be watched to gauge the health of global growth.
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US DOLLAR WEEKLY PERFORMANCE AGAINST CURRENCIES AND GOLD