Francesco Pesole, the FX Strategist at ING, notes that the good performance of equities in spite of the stalemate in US relief package negotiations, virus data continuing to raise second wave concerns and a fragile geopolitical environment is likely to be the story of the week in global markets. 

"The S&P500 briefly touched record highs yesterday, confirming the ability of equities to quickly shrug off negative drivers to sentiment. This remains a key point in favour of the USD bearish argument. The greenback today is indeed showing weakness across the board as Japanese equities are following yesterday’s US gains and providing support to global sentiment."

"The economic calendar will not offer catalysts today apart from the weekly jobless claims report. Initial claims are expected to nudge lower from 1,186k to 1,100k, according to consensus. The coincidental end of the US$600/week Fed payment may have discouraged fresh filings and this could favour a lower figure. Still, US politics is likely to remain at the center of investors’ radars heading to the weekend: while the announcement of Kamala Harris as Joe Biden’s running mate has shifted some attention from US stimulus negotiations, the latter remains a key sticking point to endorse market reflation hopes."

"Despite Secretary Mnuchin reportedly reaching out to Democrat Speaker Pelosi yesterday to take some steps towards resolving the standoff, the two parts still appear very far apart and a breakthrough is hardly imminent. The question now is whether this will be enough to prompt a slowdown/correction in the stock rally. Latest evidence suggests investors may turn a blind eye to the matter, and the balance of risks remains tilted to the downside for the USD today as well."