It was chaotic, certainly contentious.
Global investors who were watching the first of three televised debates between US President Donald Trump and Democratic candidate Joe Biden would have had a tough time cutting through the constant interruptions. It’s highly unlikely that the 90-minute sparring session between the two men would’ve swayed any voter’s minds, and the Dollar index (DXY) also offered little reaction during it all. Once the debate began, the DXY unwound all of its gains from the half hour prior to the event, to set a new week-to-date low at 93.82.
However, once the debate ended, the DXY did stage a rebound to test the 94.0 psychological level. Still, the moves were not sizeable to deviate from the downward trend on the M30 timeline seen since September 25th. The DXY remains about two higher on a month-to-date basis, and is set to cap its largest monthly gain since July 2019.
The Dollar’s rebound was perhaps fuelled by a growing sense that investors have to brace for a potentially delayed outcome to the 2020 presidential elections. This was a major talking point towards the end of the debate, and that could weigh on the markets’ collective mind at least for the next five weeks, if not longer.
Although many Americans have already begun the voting process, via mail-in ballots ahead of the November 3rd polling day, the world may not know who will be the next President of the United States potentially for an extended period after votes have been cast. Besides the Dollar’s recovery, this concern was also evidenced by US equity futures erasing gains and turning into the red after the debate ended.
Such a scenario however does augur well for safe haven assets, with a delayed outcome potentially throwing US policy continuity into doubt. The political uncertainty could paralyse risk sentiment, and perhaps prompt investors to increase their exposure to safe haven assets, including Gold.
Bullion extended declines as the debate wore on, having failed in its latest bid to claim the $1900 handle, and even broke below the psychologically-important $1890 level after the debate ended as the Dollar’s rise weighs on the precious metal. However, with the looming spectre of a contested result to the 2020 US presidential elections, Gold could well push above the $1900 level going into next month.
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