FUNDAMENTAL REVIEW OF USD: BEARISH
- The haven-related US dollar could be punished by robust corporate income.
- Fiscal stimulus delays can cause risk aversion, push the havens.
- The third quarter’s gross domestic product data may be strong, but the last quarter faces a more difficult time.
THIRD QUARTER PROFITS
Investors will closely examine the Q3 company income data from tech, industrial, energy, and pharmaceutical major players. Some large companies are Facebook, Apple, Twitter, Visa, Deutsche Bank, GE, and others.
The previous week, Tesla considerably exceeded revenue forecasts and saw the stock rise by 5 percent in a day. Even with slashing revenues, the military stock of Goliath Lockheed Martin fell to soft guidance for next year. The S&P500 mixed-income didn’t assist. Closing the week in the negative region as current US fiscal aid negotiations muddle the feelings and undermine risk appetite.
This same dynamic could play out again the week in front of us, possibly by setting up the equity index for yet another week of losses along with other indices. The USD could go up at the cost of these benchmarks of growth, although progress in fiscal discussions in addition to robust profit data may turn around this dynamic.
US GROSS DOMESTIC PRODUCT DATA
Flash US GDP is on deck and expected to show a 32% yearly figure for Q4 after the contraction of -31.4% in the previous period. The strong rebound was probably the outcome of robust fiscal and monetary incentives. Whose impacts in the last quarter data may be mild. An even stronger figure could penalize the dollar if it increases risk appetite, but volatile times are ahead.
US GROSS DOMESTIC PRODUCT DATA LOOKS GREAT – BUT THERE IS A TWIST
COVID-19 THREAT TO IMPACT ECONOMIC RECOVERY
Another precaution in the third quarter’s robust growth was the slow easing of lockdown rules, which led to economic stability. With coronavirus cases appearing over the globe again, the specter of re-imposed lockdown rules has been worrying investors. Predictions of slowed down growth, combined with political instability following the elections, could reduce the dollar’s decline if it starts a haven-rush.