November 23, 2020
- Vaccine news stokes risk-on sentiment
- GBPUSD surges as Brexit deal hopes rise
- US dollar sinking vs G-10 majors
FX Ranges at a Glance
Source: IFXA Ltd/RP
FX Recap and Outlook: Pharmaceutical company AstraZeneca (AZN: Nasdaq) and the University of Oxford claimed their COVID-19 vaccine was 90% effective, without serious side -effects, and could be approved for use before the end of the year. That is good news for American’s who are averaging 170,881 new cases per week.
It was music to the ears for global equity traders. The major Asia stock indexes closed with gains except for Japan’s Nikkei 225 which was closed for a holiday. European bourses are cautiously higher as they weigh the pros and cons of existing coronavirus measures on the economy and hopes for a vaccine down the road. US equity futures point to a positive open on Wall Street.
EURUSD traded firmer in Asia, and Europe, then spiked in early NY trading, rising from an overnight low of 1.1854 to 1.1905. Traders are looking past PMI data that showed the economy shrinking, which was expected due to the slate of virus containment measures that were in place and focusing on positive vaccine news. The intraday technicals are bullish looking for a break above 1.1920 to extend gains to 1.2000.
GBPUSD soared on positive Brexit news, rising from 1.3290 to 1.3380. The UK Sun said a confidential memo leaked on the weekend said EU officials think a Brexit deal is 95% done. Traders ignored weak Services PMI data, and are looking ahead to a speech from Prime Minister Johnson, who is expected to say he is easing lockdown measures.
GBPUSD technicals are bullish above 1.3260 looking for a test of 1.3500.
USDJPY traded quietly in a 103.70-103.85 range on light volume due to Thanksgiving Day holiday in Japan.
AUDUSD and NZDUSD rallied on the back of “risk-on” demand sparked by the positive vaccine news. NZDUSD got an added lifted from Q3 Retail Sales data which surged 28% q/q, beating the forecast for a 20% increase. Better than expected Australia PMI data underpinned AUDUSD.
Oil prices firmed with WTI rising from $42.31/barrel to $43.31/b before they eased down to $42.74/b in NY trading. Prices are supported by hopes Opec and Russia will refrain from raising output when they meet at the end of the month, and by vaccine news.
USDCAD dropped in Asia and again in Europe, falling from 1.3093 to 1.3048. It is consolidating those losses near the low, in NY trading. Canadian dollar gains lagged those of the antipodean currencies, in part because of the latest coronavirus outbreaks across Canada. Toronto and Peel Region, with a combined population of 3.4 million, and Manitoba (population 1.4 million) are suffering from a convoluted, mess of coronavirus rules, regulations, and lockdown measures, which would tax the processing power of a super-computer to understand.
There are not any US or Canadian economic reports of note on tap today. FX traders will get direction from equity price action, and US politics.
USDCAD Technicals: The intraday USDCAD technicals are bearish below 1.3105, looking for a break of support in the 1.3040-50 area to extend losses to 1.3005 and then 1.2950. For today, USDCAD support is at 1.3040 and 1.3005. Resistance is at 1.3090 and 1.3120. Today’s Range 1.3010-1.3090
Chart: USDCAD 4 hour
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank