Foreign exchange markets are calm this Tuesday morning, with investors looking towards the United States as the deadline for an agreement to be reached on an economic stimulus package between Democrats and Republicans approaches. The maths is simple: failure to agree today will probably mean delaying the deployment of the much-needed aid package until after the November 3 election. With a second wave of the coronavirus advancing in Europe, such a scenario would be likely to penalise risk-related assets like the Euro while increasing the safe haven appeal of the Dollar. The current lack of movement in FX trading may be the calm before the storm, with investors keeping a keen eye on the discussions scheduled for later between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin. More volatility should be expected towards the end of the day.
