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Intex Insights

MARKETS STEP BACK FROM THE BRINK

Trump said that he likes a strong dollar, in contrast to the rest of his presidency where he has been calling for a weak dollar. While a strong USD doesn't help equities, he may have worked out that is helps his popularity

Markets looked to be falling away heavily but took stock in Trump's desire to look at a 4th coronavirus bill.

BOC head Poloz was upbeat, saying that the 'best case scenario' was still within reach & that fiscal and monetary response was doing its job.

Gold eventually broke out of some consolidation, though it hasn't made new highs yet, and the market will be watching in the coming days to see if it can capitalise on the move. It's a crowded trade but global QE keeps pushing it higher.

EURO GDP & US RETAIL SALES

Germany GDP (0700) & Eurozone preliminary GDP (1000) are the morning highlights. Although the market knows the data will be terrible, with EURUSD nestling around the 1.08 mark and the weekend ahead, it could be decision time for a breakout and terrible GDP reads could give it a push.

In the afternoon, US Retail Sales (1330) and Michigan Consumer Sentiment (1500) may provide some whipsaw if there is not a full commitment to any Euro sell-off that takes shape.

DOES THE EURO FALL?

The Euro has hit off the 1.08 mark seven times so far this year. A firm break below would surely signal an overall rise of USD, the strength of which has been confined to emerging market currencies over the last few months.

Our momentum tracker has the Euro as a strong sell, though we will be keeping one eye on the mood of the market; at the moment, risk off and USD strength go hand in hand so EURUSD will struggle to go down if the market wants to bounce.

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