Trump Says GSA Must 'Do What Needs To Be Done"

Following almost three weeks of uncertainty and confusion around the outcome of the US elections, Donald Trump gave the order last night that the General Services Administration could begin the handover Biden. Trump said the GSA, which is the federal agency in charge of overseeing the transition, can now “do what needs to be done” following the GSA’s acknowledging that Biden is the “apparent winner” of the elections. In a tweet issued by Trump yesterday, he said: "In the best interest of our Country, I am recommending that Emily and her team do what needs to be done with regard to initial protocols and have told my team to do the same."

Notably, despite Trump’s insistence that the transition begin, he still did not let go of his claims of corruption and fraud and instead vowed to continue the “good fight”. However, regardless of whether Trump concedes or now, Joe Biden will be sworn in as the 46th president of the United States on January 20th.

Markets Cheer The News

We’ve already seen a strong reaction in the markets with risk assets and higher yielding currencies rallying while safe havens and gold have been under pressure along with the Dollar. The move has been welcomed by investors as finally offering some clarity on the situation. With the transition now underway, markets are beginning to focus on the trade-able implications of a Biden administration. The first such focus being on the stimulus package Biden has pledge to deliver as his first priority. The Democrats had been pushing for a much larger figure than the republicans and despite the divided Congress which mean that such package is unlikely, a stimulus package will be coming. Senior advisers to Biden are even suggesting that he agree to compromise with Republicans in the interest of getting a deal through as quickly as possible given the recessionary risks stemming from the ongoing pandemic.

Strong PMIs Surprise

However, republicans are likely to dig their heels in further, especially in light of yesterday’s strong PMI releases. Both the US services and manufacturing PMIs were stronger than expected over the month. Despite expectations for both indicators to have weakened over the month, both sets actually improved on the prior month’s readings. These readings come amidst the Trump administration ordering that the Fed return a portion of the unused funds issued under the CARES act by year end, effectively ending these programs. Biden’s team is reportedly looking into how they can circumvent such an occurrence given the Fed’s own insistence that the economy needs continued and even greater support.

Technical Views

DXY

The US Dollar has turned lower again this week and is now retesting the broken bearish trend line below the $92.62 level. While below here the next support is the $91.74 level which is the current 2020 low. If this level breaks, bears will have a clear path down to $90.72 next.

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