Bank of England Fights Covid19 with More Asset Purchases

GBP

The British pound gained ground against rivals despite easing measures by the Bank of England. The monetary policy committee decided to increase Gilts purchases to £875 billion while keeping corporate bond purchases at £20billion, raising the total asset program to £895 billion. Interest rates reminded unchanged at 0.10% with the voting of 9 to 0. The bank intervened to ease the impact of the lockdown measures on the British economy, as Brexit turmoil prevailed. Investors received the message that the central bank will do whatever it takes to support a robust economic recovery. On the other hand, the dollar weakness made risk currencies more appealing. The GBPUSD rallied to $1.3040, and the EURGBP declined to 0.9005.

USD

The dollar index, which measures the greenback against a basket of major currencies, continued to weaken, testing 93.22, as Biden holds the upper hand in the US elections until now. Investors are anticipating that Biden will be calling for a massive fiscal stimulus package, which could on the buck. On the other hand, the Federal Reserve will conclude its monetary policy meeting later today. The market is widely expecting the Fed to remain on hold but address the recent rising risks to the economic recovery. The EURUSD rallied to $1.1751, and the USDJPY fell to 104.22.

Equities

Major US stock index futures extended upside rally as investors are optimistic about knowing the next US president soon. Joe Biden is leading until now with 264 electoral votes while Trump is holding 214 electoral votes. Nevada, Pennsylvania, North Carolina, and Georgia will decide the final outcome. US stock benchmarks are enjoying the slight clarity with Biden's lead, where the Dow Jones Industrial Average futures rose to 28107, the S&P500 futures advanced to 3489, and Nasdaq futures raced higher to 12038.

Metals

Gold prices inched higher, supported by chances of massive stimulus if Biden becomes the next president. The price of a gold ounce rallied to $1917, the highest price since the elections started. Meanwhile, the price of a silver ounce rose to $24.55, and Palladium futures surged to $2347.

Oil

Oil prices eased slightly after its three-day winning streak. The optimism over supply cuts to stabilize the market ahead of the year-end boosted prices. On the other hand, the US Energy Information Administration reported a sharp drop in inventories by 7.998 million barrels. The West Texas Intermediate crude December delivery hovered near $39, and Brent Blend January delivery held steady near $41.

Major Economic Events