The Asian market has generally been driven more by market optimists who expect that the US will soon announce a package to support the world’s largest economy.
Fawad Razaqzada, market analyst at TF Global Markets, said: “Stimulus packages of any size above $ 1.8 trillion - that’s what the White House has been proposing to bail out the economy. by Covid-19 - will bring a lot of positivity to the market ”.
The recent signs on the Asian market show an impressive prosperity. Japan’s Nikkei 225 increased by 0.31%, Australia’s S&P ASX 200 increased by 0.12%, Hong Kong’s Hang Seng index increased by 0.75% and the MSCI Asia Pacific Index increased by 1%. .
Hong Kong has been outperforming after signs that the Special Management Region’s economy is improving as retail sales and prices in the real estate market recover.
"With the Covid-19 epidemic stabilized in China, we expect the Chinese border to reopen in the first quarter of 2021," said DBS economist Samuel Tse. a strong driving factor in the world economy ”.
In addition, Samuel Tse also forecasts that the world GDP growth will increase from 0.5% to 4.0%.
The yuan has steadily risen to its strongest level in the past 2 years against the dollar due to growing optimism about the Chinese economy and speculations that the US Democratic presidential candidate, Joe Biden will win next month that will lead to better Sino-US relations.
Currently, the domestic yuan has risen to 6.6444 / USD - the strongest increase since July 2018.
Meanwhile, the US Treasury extended its slide as the prospect of fiscal spending raised concerns about supply. The 10-year yield rose 3 points to 0.81% and the dollar was also weaker against the currency basket. This increased the demand for gold on the world market - the metal rose 0.5% to $ 1,917 / ounce.
Prediction about the victory of Democratic candidate Joe Biden also increased pressure on the dollar.
"The dollar is likely to weaken significantly because the Fed will keep interest rates low for a while," said Peter Kinsella, Global Forex Strategy Head of UBP.
"The dollar tends to sell off during a period of global economic expansion, and we think it’s time for the dollar to sell off," Kinsalla added. In addition, the prospect of a Democratic administration could increase pressure for the Fed to maintain a looser monetary policy stance in the coming years.
