USD Weakness Supporting Equities

Global equities benchmarks have been well supported again this week, led by gains in US equities as the US Dollar continues to weaken. The Dollar has been hit by rising political uncertainty this week ahead of the US elections. With just over three weeks to go until voters take to the polls, national and local polling results continue to favour Democrat candidate Joe Biden. With some polls giving Biden as much as a 14 point lead on Trump the prospect of a change in administration is acting as a headwind to the Dollar. Interestingly, equities continue to find higher ground despite the risks of a Democrat win, which is typically seen as bad for the business environment.

In the UK and Europe, the main focus is on the growing second wave of COVID with political leaders there facing the tough call of how best to handle the rising infection numbers. For now, it seems that expectations of further central bank easing are keeping equities prices firmly in demand as traders eye another wave of stimulus over the coming months as COVID flares up again, causing inevitable economic damage.

Technical Views

DAX (Bullish above 13322.69)

From a technical viewpoint. The DAX is pushing higher again this week with price continuing the bullish reversal off the 12290.40 region. Bulls will need to see a clear break of the 13322.69 level next to put fresh momentum back into the market and continue the longer term bullish move.

S&P500 (Bullish above 3391.75)

From a technical viewpoint. The S&P continues to trade firmly higher following the rebound off the 3226.50 level. Price is now retesting the broken bullish trend line, with structural resistance coming in just above at the 3586 level (all-time highs). This is a big technical level for the S&P and a break higher here will signal the continuation of the longer term bullish trend.

FTSE (Bullish above 6123.3)

From a technical viewpoint. The FTSE has now broken above the bearish channel top following weeks of bullish divergence in momentum studies. If bulls can clear the 6123.3 local resistance level next, this will open the path for a run up to 6543.4 next.

NIKKEI (Bullish above 23273.6)

From a technical viewpoint. The NIKKEI continues to trade higher within the shallow bullish channel which has formed over the last month. While price holds above the 23273.6 level, the near-term bias remains bullish with bulls looking for a break above the 24069.4 level next.

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