US Open – Jobless claims continue to head in right direction, Biden’s economic plan, Oil anchored, Gold shines

Risk appetite is struggling as the coronavirus spread is still not under control in most parts of the world and as geopolitical tensions between China and the West intensify. Australia’s decision to suspend the extradition treaty with Hong Kong in response to their new security law shows the US could have international support in dealing with China. 

In the US, economic activity will require a successful reopening of schools in Autumn and that may hinge on a major reversal on mandating masks.  The virus spread is not plateauing as many populous states (Texas and Florida) are still seeing significant increases in hospitalizations. 

S&P futures are slightly higher, while the Nasdaq continues to benefit from strong demand for mega-cap tech stocks. The dollar is softer across the board and hovers near some critical levels.

Jobless Claims

The weekly jobless claims report showed everything is heading in the right direction, but the situation is still bleak.  Initial jobless claims fell to 1.31 million, lower than the 1.37 million consensus estimate but still the 16th straight time above the 1-million mark.  Continuing claims dropped but are still at an eye-dropping 18 million level. The recent wave of new coronavirus cases is not yet impacting the labor market yet and many investors are breathing a temporary sigh of relief. 


US equities have not significantly priced in Presidential risk but that will change soon.  Throughout COVID-19, President Trump saw an easy path to re-election go up in smoke.  Former-VP Biden enjoyed a massive swing in his favor in several polls and now has the possibility of a blue wave as the Senate seems it could be up for grabs.  Many political watchers will pay close attention to any details with his new economic policy at his speech in Dunmore, Pennsylvania today. 

Biden’s honeymoon period of winning the Democratic nomination is over and the scrutiny of his policies will begin now.  Biden’s economic plan looks to reverse some of President Trump’s policies but does not seem too radical.  Enhancing the public health care options and raising corporate and estate taxes could weigh on risk appetite over the coming weeks.  He also looks to deliver on $15-hour federal minimum wage, 12-weeks paid family leave, universal pre-kindergarten, and Fed-supported payment platforms low income Americans.  Biden targets a moderate-centrist platform that will try to pull in the progressive vote.  Biden will likely struggle to convince the public’s opinion that US economy will do better with him on trade, but that might not matter as he leads with a moderate economic platform. 


Oil prices remain anchored just below the $41 level after US weekly jobless claims suggest the economic recovery remains intact and that crude demand should improve despite huge daily increases across some of the more populous states.  WTI crude remains stuck despite the broader market rally.  Many energy traders might be growing cautious with the demand outlook after yesterday’s EIA oil inventory report showed exports fell 1 million barrels, to the lowest levels since November.  Oil seems ripe for a pullback here and if the demand outlook shows further signs of faltering, WTI could settle back towards the mid-$30s.   


Gold prices are slightly softer from the highest level since 2011 as the coronavirus spread continues to devastate some of the more populous states in the US.  Gold traders are seeing a little exhaustion after clearing the $1800 level, but no one seems eager to abandon this trade yet.  The steady labor market rebound suggest the recent surge in new cases has not disrupted the economic recovery.  American jobs however are still not coming back fast enough and increases the call for a strong fiscal response which should keep gold’s stimulus going strong. 

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.