The dollar index ended lower around 92.8 on Friday as investors digest the latest presidential debate and stimulus talks. Joe Biden and Donald Trump had the last debate before the presidential election on Thursday and the Democrat continues to lead the polls. Meanwhile, House Speaker Nancy Pelosi signalled optimism that a stimulus bill can be approved, but she also admitted that it may take a while for legislation to be written and signed. Meanwhile, Treasury Secretary Mnuchin said “We’ve offered compromises, The speaker, on a number of issues, is still dug in. If she wants to compromise, there will be a deal". Yet, a fresh coronavirus aid bill before the election on November 3rd seems unlikely. On the week, the dollar lost 1% loss. The dollar has been weakening since mid-May and is down near 5% on the year amid rising optimism about the global economic recovery, specially a robust rebound in China.

The IHS Markit US Composite PMI increased to 55.5 in October 2020 from 54.3 in the previous month, a flash estimate showed. The reading pointed to the fourth successive expansion in private sector activity and the sharpest since February last year, as the services sector grew at the fastest pace in nearly two years (PMI at 56 vs 54.6 in September) and manufacturing output rose at the steepest rate in 21 months (PMI at 53.3 vs 53.2 in September). New orders advanced at the second-fastest since March last year, while exports sales fell as foreign client demand slowed. At the same time, the job creation rate slowed. On the price front, input price inflation eased to a four-month low and output charge inflation slowed. Lastly, sentiment improved notably to its highest level since May 2018 driven by expectations of sustained client demand, political uncertainty easing after the election and hopes of an end to COVID-19 related restrictions.

WTI crude futures dropped 2.2% to near $39.8 a barrel on Friday, booking a 2.7% drop on the week, the first weekly decline in three. Concerns over fuel demand recovery mounted as the number of global coronavirus infections continue to rise with several countries including the UK, Spain, Italy and the US state of Utah imposing fresh restrictions. On the production side, Libyan oil output is expected to rise further by the end of the month, also pressuring crude prices. On the other hand, prospects of an extension to OPEC-led supply curbs and coronavirus vaccine news prevented further declines. Russian President Vladimir Putin said on Thursday that he was prepared to extend record supply cuts as cases of COVID-19 surge in the US and Europe. At the same time, American pharmaceutical company Gilead Sciences received US FDA approval for its antiviral therapy.

Mexico’s IPC gained 55 points or 0.1% to 38708, as the gradual domestic recovery continues. On Friday, the MXN appreciated a sharp 0.6% against the dollar after data showed retail sales rose 2.5% in August and booked the fourth straight monthly increase, as consumer spending continues to recover from lockdowns. The peso continues to be the strongest currency among emerging markets with a 6% gain in October, as presidential candidate Joe Biden continues to lead polls and the AMLO administration announced early in the month a new private-public infrastructure program worth 1.4% of GDP. During the week, the IPC jumped 2.2%.

Wall Street closed little changed on Friday and the Dow snapped a three-day winning streak, as fiscal stimulus uncertainty continued amid rising cases in the US and Europe. While House Speaker Nancy Pelosi signalled optimism that a stimulus bill can be approved, she also admitted that it may take a while for legislation to be written and signed. Meanwhile, Treasury Secretary Mnuchin said “We’ve offered compromises, The speaker, on a number of issues, is still dug in. If she wants to compromise, there will be a deal". On the pandemic side, Covid-19 hospitalizations rose and reached new records across the US West and Midwest on Thursday. The Dow Jones lost 28 points or 0.1% to 28336. In contrast, the S&P 500 added 12 points or 0.3% to 3465 and the Nasdaq gained 42 points or 0.4% to 11,548. During the week, the Dow lost 0.9%, the S&P declined 0.5% and the Nasdaq dropped 1.1%.

European stocks closed higher on Friday, with Frankfurt's DAX 30 rising 0.8% to end at 12,646 as carmakers and bank shares outperformed amid upbeat corporate updates. Germany’s Daimler AG raised its full-year profit forecast and reported stronger-than expected quarterly results while Renault said it should have positive cash flow from cars by the end of 2020. At the same time, shares of Barclays jumped as its consumer businesses swung back to profit and provisions against bad loans fell in the third quarter. Meanwhile, coronavirus remained in the spotlight, with Europe crossing the 200K daily infections for the first time on Thursday but biopharmaceutical company Gilead Sciences received US FDA approval for its antiviral therapy. On the economic data front, PMI figures showed Eurozone’s private sector activity fell back into contraction territory in September due to steep deterioration in the service sector. Still, for the week, the index shed 2.1%, the largest loss in a month.

Lumber has made further adjustment falling to below $520 per 1000 board feet in the third week of October and down almost 50% from an all-time high of almost $1000 reached on September 14th due to a seasonal drop in demand as the winter comes along with a falling request from DIYers. Still, lumber remains the top-performing major raw material this year on the back of robust demand from the renovation and new home markets in a wake of COVID-19 pandemic as well as drop in supply due to massive forest fires in western parts of Canada and the US.

The IHS Markit Germany Composite PMI edged down to 54.5 in October of 2020 from 54.7 in September, above market expectations of 53.2. The reading pointed to a solid growth in private sector activity although at a slightly slower pace than in September, according to preliminary estimates. A further rise in manufacturing (58 vs 56.4, highest since April of 2018) helped to support growth. However, in a sign of a two-speed economy emerging, service providers recorded a modest decline in activity (48.9 vs 50.6, first fall in 4 months) amid new restrictions and heightened uncertainty due to a second wave of coronavirus cases. Looking ahead to activity in a year’s time, expectations weakened for the first time in seven months. Sentiment remained positive overall, with optimists continuing to outnumber pessimists, but the degree of confidence eased to the lowest since June as worries about COVID-19 weighed on the outlook, especially in the service sector

Gold ended nearly flat around $1,901 an ounce on Friday, and booked a meagre 0.1% gain on the week as investors await further developments around a new US fiscal stimulus. House Speaker Nancy Pelosi signalled optimism that a stimulus bill can be approved, but she also admitted that it may take a while for legislation to be written and signed. Meanwhile, Treasury Secretary Mnuchin said “We’ve offered compromises, The speaker, on a number of issues, is still dug in. If she wants to compromise, there will be a deal". Yet, a fresh coronavirus aid bill before the election on November 3rd seems unlikely. Meanwhile, Joe Biden and Donald Trump had the last debate before the presidential election on Thursday and the Democrat continues to lead the polls.