21.10.2020: USD losing steam (DJIA, USDX, USD/CAD)

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US stock indexes have gained 0.3 – 0.5% today. The US dollar and Treasuries are trading lower amid the growing likelihood that Congress will eventually pass the long-awaited stimulus bill ahead of the presidential election in the US. The Canadian dollar climbed a bit against the greenback.
Today futures on the US benchmark stock indexes are posting 0.3 – 0.5% gains in choppy trading. Investors are evaluating the chance that the US lawmakers will pass the second bill on financial aid to the US economy. Besides, investors are monitoring financial records of top American companies that will clear up the outlook for the whole US economy. Futures on the Dow Jones are trading at 28,189. Futures on the S&P 500 are wavering between gains and losses.
The US has been reporting soaring coronavirus cases for the third day in a row. Investors are stoking fears because growing numbers of patients are admitted to hospitals daily. Due to rampant COVID-19 rates, the odds are that the local authorities will have to re-impose lockdown measures again. This will ruin hopes for a rapid recovery of the US economy.
Meanwhile, investors are keeping close tabs on corporate earnings reports for the third quarter trying to figure out how top US companies are coping with an economic downturn. The market awaits reports from Verizon Communications, Tesla, Chipotle Mexican Grill, and Whirlpool.
The gridlock with the stimulus package still cannot be settled today. House Speaker Nancy Pelosi extended a deadline for one more day. US President Donald Trump boosted investors’ hopes saying that he was ready to approve the package worth more than 2.2 trillion dollars despite disagreement in the ranks of his own Republican party. So, investors are full of hope that lawmakers will soon reach a compromise on fiscal stimulus measures.
In anticipation of the deal, yields of 10- and 30-year US Treasuries spiked to a four-month high overnight. At the same time, the US dollar index tumbled 0.26% to 92.827, the lowest level in six weeks.
In case the expectations of the financial aid come true, the US dollar is likely to push down both inflation and consumer activity.
The USD/CAD pair is trading at 1.3130 with prospects for a further downtrend.
Investors want to play safe ahead of the presidential election scheduled for November 3. Most market participants are cautious avoiding risky bets, though the latest polls reveal that ex-Vice President Joe Biden has a good chance to be elected next US President.

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