Currency defensives USD and Yen edged higher against other currencies on Friday after Trump announced that he and his wife had contracted Covid-19, just a month before the presidential election.

Despite the initial reaction, where US stock futures lost more than 1.5%, the decline is likely to continue. Trump caught the infection that kills people, while at the same time he is at risk (he is over 70). We can be sure that he will receive the best treatment, but reports a-la "the POTUS moved to ICU” (recall Boris Johnson’s case) can be a serious shock for the market. There is definitely non-zero probability to have this risk realized which is already a factor of downside pressure and buyers’ caution.

It is interesting to speculate how this event might affect the outcome of the presidential election. On the one hand, the president, who had a really dangerous disease for his age - a hero who did not hide, was not afraid, kind of joined in one of the common problems of the people, get "closer" to them. At least some empathy and compassion from American people is guaranteed. Trump has already made a good move, which undoubtedly adds points to him - in the choice his own health vs. serving to nation he chose the second, saying that he won’t transfer powers and continue to lead the country. The fact that the president caught coronavirus is a powerful press event and the opponents will find it difficult to employ in their favor due to the fact that the patient will always receive more sympathy than the healthy.

On the other hand, the need for self-quarantine seriously limits the president's ability to run presidential campaign when time is running out.

Market frustration began to mount even before Trump's shocking announcement. Despite signs of some progress, stimulus talks hit an impasse on Thursday. Democrats again voted for an "unrealistic" fiscal package, which, of course, will not find the support of a sufficient number of Republicans in the Senate. The White House speaker labelled the Democrats' proposal as "not serious", signaling that the market can safely discount positive developments in the talks.

By the way, Senate’s October recess starts from tomorrow (Senate), so we can forget about the approval stimulus bill before the elections as well:

Congressional calendar for October

The focus shifts to economic data as well as White House reports on Trump's health. The NFP promises to be surprise on the upside today, as indicated by the ADP (positive surprise) and jobless claims over the past week. Noteworthy is the sharply reduced pool of unemployed, receiving payments for more than a week - from 12.58 to 11.76 million (forecast 12.2 million). It is unlikely that a strong report will inspire bulls to any feats, but weak data is likely to push US indices lower promoting further USD recovery.

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