The sentiment starts to deteriorate (Daily analysis 6.11.2020)

The US dollar sell-off faded as the counting goes on. Joe Biden is set to be confirmed as the new president. At the same time, the Senate race will not be decided until January as two seats representing Georgia are to be filled at an additional election.

The greenback (the US currency) remains weak, but it's depreciation halted. The EUR/USD exchange rate hovers close to 1.1850, and the GBP/USD pair recovered and remains above 1.31 mark. The USD/JPY depreciated and now it is traded at 103.50. Wall Street experienced another ride higher with the S&P 500 surging almost 2%, but equity futures and the majority of Asian indices trade in the red.

The Fed ready to act

The Federal Reserve left monetary policy and its communications unchanged, which means that it is ready to act in the case of the second wave posing a severe threat to the economic outlook. For now, it opted for leaving the Fed funds target rate at 0-0.25% and will conduct bond purchases "at least at the current pace". It also reiterated that the current level of interest rates is expected to be unchanged "until employment fully recovers to pre-COVID-19 levels". The outcome of the previous meeting points to remaining on hold through to the end of 2023.

The US labour market report for October is due out at 2:30 pm CET, and recent data suggest that the recovery continued at a decent pace before the worsening of the epidemic situation. Employment is still significantly below last year's levels, and the job market momentum will stall starting from November. Consequently, a huge fiscal package remains a must, which was also underlined by the Fed chair yesterday.