Summary:
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US dollar (USDIDX) ahead of midterm elections
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S&P 500 (US500) pulls back to the 200-session moving average
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Sugar tries to resist downward pressure
One of the major events scheduled for this week are midterm elections in the United States. Clash between Democrats and Republicans was quite severe in the past couple of weeks. According to the latest polls, Democrats are said to fare a bit better than Republicans who currently hold majority in both Senate and House. In case Republicans lose majority, Donald Trump may find it harder to bring new idea into life and the US political scene may find itself in a gridlock until the end of Trump’s tenure. US dollar underperformed slightly in the recent days as markets were concerned what outcome may result from the elections. Results should be known this night. Stellar NFP report released in the previous week did not help the greenback and the US dollar index (USDIDX) still remains subtly below this year’s high in the vicinity of 97 pts.
Source: xStation5
Another market that is worth taking look at in the context of the US elections is, of course, S&P 500 index (US500). Moods on the global equity markets improved substantially as Chinese and the US officials hinted that the potential trade agreement may be looming. Moreover, elections itself are interesting as the latest big rally started following the US presidential elections in 2016. US500 pulled back and broke below the 200-session moving average but the latest bounce brought price back into the vicinity of this previously broken support level. In case Democrats win majority in Senate or House further reforms from Trump and GOP party could be questioned.
Source: xStation5
The last market we have decided to mention is sugar. We saw significant price increase recently when it comes to sugar or coffee. Both commodities benefited from drop in the political uncertainty in Brazil and strengthening of the Brazilian real. The latest price jumps on sugar were also result of the so-called “short-squeeze”. According to CFTC data, net speculative positioning on sugar was extremely bearish in mid-September while now it shows that moods among investors are balanced. Sugar prices still remain in the vicinity of the 23.6% Fibo level and above highs from June. Further BRL strengthening could be a trigger for another upward impulse on both, sugar and coffee.
Source: xStation5
