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EUR/USD Rises as Traders Bet on US Stimulus

October 21, 2020 by

EUR/USD rose today, meaning that it was advancing every single day this week for far. Most market analysts speculated that the weakness of the dollar was the result of hopes that US politicians will be able to agree on a stimulus package after all. Some argued, though, that another reason for the greenback’s softness was the fact that uncertainty ahead of the US presidential election made it less comfortable for investors to hold the US currency. As for macroeconomic data in the United States, this week is very poor on releases, and those few that have come out by now did not affect the market much.

US crude oil inventories fell by 1.0 million barrels in the previous week instead of rising by 0.5 million barrels as experts had predicted. Nevertheless, the stockpiles remained above the five-year average for this time of year. The reserves dropped by 3.8 million barrels the week before. Total motor gasoline inventories increased by 1.9 million barrels and were also above the five-year average. (Event A on the chart.)

Yesterday, a report on housing starts and building permits was released. Housing starts were at a seasonally adjusted annual rate of 1.42 million, up from the revised August level of 1.39 million (1.42 million before the revision). Building permits were at a seasonally adjusted annual rate of 1.55 million, up from 1.48 million in August. The median forecast was at 1.45 million for housing starts and 1.52 million for building permits. (Not shown on the chart.)

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