Here’s how the week started out. US Elections, Brexit nearing some kind of finality, Bank of England Monetary policy decision, and the 2nd wave of the Pandemic threatens to shut down the world economy…again. Yet as frightening as it seems, the market’s reaction hasn’t been as shocking as we would have expected, it’s as if the markets are getting used to the extraordinary.
However, traders beware – the reactions could be delayed and catch us off guard. How will the USD respond to a new Democratic government in the US? The markets adapt to anything, except uncertainty and clearly there will be nervousness if there is a changing of the guard, which looks to be the case at the time of writing. A dollar selloff seems the likely and most probable scenario and we need to look for the beneficiaries here. Gold may well break out of its $1900 comfort zone and test recent resistance levels of $1920 – $1930. Will the Yen retest the 104.00 level? And watchout, there seems to be no stopping Bitcoin – who would have thought, a new safe–haven?
Given that there could be legal battles, recounts and baseless claims in the days ahead, maybe not a bad idea to watch from the sidelines, and let the dust settle before jumping in. Patience has always been an essential element of a successful trader’s arsenal, and now is the time to exercise this discipline.