Picture: Rhino films
October 26, 2020
- Coronavirus, Geopolitics, erode risk sentiment
- Weak German IFO data undermines EURUSD
- Brexit trade deal hopes boost GBPUSD
FX Ranges at a Glance -Monday open to Friday open
Source: IFXA Ltd/RP
FX Recap and Outlook: Chicago Fed National Activity Index fell from 1.11 in August to 0.27. The Chicago Fed tweeted “National Activity Index suggests slower, but still slightly above-average growth in September. FX markets largely ignored the news.
Asia FX markets started later than usual as New Zealand was closed for a national holiday. FX traders were on the defensive due to a surge in positive COVID-19 tests across Europe and the US.
Asia equity markets closed with losses, and European bourses are deep in the red. US equity futures are in negative territory, and oil prices are sharply lower. China said it would impose sanctions on US companies selling arms to Taiwan. Just another Manic Monday.
EURUSD slipped steadily overnight, falling from 1.1859 in Asia to 1.1804 before recovering to 1.1820 in NY trading. The German IFO Business Climate Index fell for the first time in five months. The Institute wrote companies were more sceptical over developments in the coming months.”
Expectations dipped to 95 from 97.4 while Current Assessment improved to 90.3 from 89.2.
EURUSD suffered from reports that France would veto any UK trade deal if they were unhappy with the fishing proposals. The disputed election in Belarus and the France/Turkey spat also weighed on prices.
EURUSD technicals are bullish above 1.1705.
GBPUSD traded down from 1.3060 in Asia to 1.2994 in Europe, before recouping all the losses in early NY trading. GBPUSD bounced on optimism that EU/UK trade talks would lead to a deal, as there are reports that Germany and other EU countries are pressuring France to compromise on fishing.
USDJPY traded in a 104.67-104.97 range. Mild risk aversion sentiment capped gains while broad-based US dollar demand supported prices.
AUDUSD and NZDUSD slipped in Asia and recovered in Europe as they tracked broad US dollar sentiment.
USDCAD rallied to 1.3185 from 1.3123 as risk aversion sentiment rippled through FX markets. The currency pair will continue to track US dollar moves against the majors.
US stimulus talks and coronavirus updates will drive FX direction today.
USDCAD Technicals: The intraday technicals are bearish while prices are below 1.3190, with a break below 1.3160 extending losses to 1.3120. Longer term, the downtrend from March is intact below 1.3270. For today, USDCAD support is at 1.3150 and 1.3110. Resistance is at 1.3190 and 1.3240. Today’s Range 1.3010-1.3110
Chart: USDCAD four hour
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close