Picture: PNGio .com
October 6, 2020
- Euphoria from Trump’s White House return fades
- ECB’s Lagarde talking about need for more easing
- Powell speech “Economic Outlook” this morning
FX Ranges at a Glance
Source: IFXA Ltd/RP
FX Recap and Outlook: President Trump left Walter Reed Hospital to great fanfare, which helped risk sentiment in the early hours of the Asia trading session. Asia equities closed with gains, but the positive feeling faded in Europe. The major European bourses are flat to negative, and US equity futures are in negative territory. Comments by ECB President Christine Lagarde about the need for further easing weighed on EURUSD.
Fed Chair Jerome Powell delivers a speech to the annual meeting of the National Association for Business Economics. The title is Economic Outlook, but he is unlikely to offer fresh insight or guidance this close to the election.
EURUSD is consolidating yesterday’s gains just below resistance in the 1.1800 area. Prices drifted between 1.1766-1.1799 overnight. German factory orders data rose 4.5% m/m in August, better than the 2.6% forecast, and July’s upwardly revised increase of 3.3%. ECB President Lagarde’s comments tempered any gain from the data.
She hinted at additional stimulus including rate cuts and an extension of the PEPP. The intraday technicals are modestly bullish above 1.1760, looking for a decisive break above 1.1800 to extend gains further.
GBPUSD traded in a 1.2917-1.3005 range. Prices are supported by Goldman Sachs’ recommending to clients to buy GBPUSD, saying recent events point to an EU/UK deal. Prices were underpinned by Construction PMI which rose 56.8 compared to the forecast of 54.0.
USDJPY traded with a modest “risk-off” bias on news that numerous White House staffers tested positive for COVID-19. However, firm Treasury yields limited losses.
AUDUSD traders were not impressed with the stimulative nature of the latest budget or the RBA monetary policy statement. The RBA left interest rates and policy unchanged and issued a somewhat tame statement. The Australian government predicted a $231.7 million budget deficit and predicted 4.25% growth. AUDUSD dropped from 0.7207 to 0.7149 in an example of “buy the rumour, sell the fact,” trading.
NZDUSD drifted lower along with AUDUSD but not to the same extent.
USDCAD traded tracked the antipodean currency price action and opened where it did yesterday. Canada trade data is due this morning, which will have little if any impact on the currency.
Fed Chair Powell’s speech will be the highlight of the day. The US trade and JOLTS reports are due, and Trump’s health, the election and coronavirus vaccines will provide the entertainment.
USDCAD Technicals: The intraday technicals are bullish above 1.3230 as prices continue to consolidate gains since September 6, inside a 1.3240-1.3420 range. A break to the downside puts 1.3000 in play, while a break above 1.3420 targets 1.3550. For today, USDCAD support is at 1.3230 and 1.3210. Resistance is at 1.3300 and 1.3330. Today’s Range 1.3230-1.3305
Chart: USDCAD 4 hour
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank