Picture: Wikimedia commons
October 22, 2020
- Feds say Russia and Iran interfering in election
- Coronavirus cases at elevated levels in Europe, UK, and USA
- US Jobless claims sharply lower than previous week
FX Ranges at a Glance
Source: IFXA Ltd/RP
FX Recap and Outlook: Initial Jobless claims were 767,000 in the week ending October 16, and the October 9 results were revised down from 898,00 to 848,000. All in all, it shows the pace of hiring is moving in the right direction. However, traders didn’t really care. They are focused on US Stimulus talks, rising COVID-19 cases, and news about Russia and Iran meddling in the election.
The US dollar is making a valiant effort at recouping yesterday’s losses. GBP was the biggest loser yesterday, and it opened as the biggest gainer. Ongoing concerns about a second-wave coronavirus pandemic may be unsettling markets. The US reported 60,964 positive tests on Wednesday, which is fast approaching the July peak of 76,533, and well-above the April-June levels, which sparked wholesale lockdowns. Europe isn’t doing any better. Authorities have locked down parts of Ireland, Czech Republic, Britain, France, Germany, and Spain. Hopes that Treasury Secretary Mnuchin and House Speaker Pelosi will agree to a new stimulus package limited US dollar gains
Asia equities took their cue from the soft Wall Street close and finished the session lower.
European bourses are in the red and US equity futures point to a negative open in the US. Gold and oil prices are off their best overnight levels.
Pundits are suggesting that this latest mild bout of “risk-off” sentiment is because the FBI accused Russia and Iran of meddling in the election.
EURUSD traded sideways in a 1.1826-1.1866, with traders lacking new data or insight to justify getting involved. The German Consumer Confidence Survey was a tad weaker than forecast, but traders weren’t interested. The intraday technicals are modestly bearish after the break below 1.1850 snapped the uptrend from October 19, which suggests further losses to 1.1790.
GBPUSD is paring yesterday’s gains as euphoria from positive Brexit comments fades. The price action continues to be driven by headlines around the trade talks. Prices are supported by the sentiment that the odds of a “no-deal” Brexit have narrowed.
USDJPY had the equivalent of a “dead-cat bounce,” overnight Prices plunged from 105.75 on Tuesday to 104.40 yesterday, then spent the overnight session in a 104.49-104.77 range. Firm US Treasury yields and a bit of caution ahead of the US election are weighing on prices.
AUDUSD underperformed against NZDUSD as the greenback eked out gains against the other G0-10 majors. AUDUSD sentiment is bearish due to expectations for the RBA to cut interest rates at the November meeting.
USDCAD is the worst performing G-10 currency in the past 24 hours. It failed to join in the US dollar sell-off yesterday and didn’t participate when the US rallied overnight. The price action is a bit odd. Coincidently, in just eight days it will be year-end for Canadian banks. They have been known to buy or sell chunky amounts of USDCAD for year-end accounting purpose in the past. Perhaps one of them is buying USDCAD, which helps explain the most recent price action. It is just a guess.
Weekly US Jobless claims are expected to fall to 860,000 from 890,000 last week, but the results may have limited impact due to the election interference story, and the COVID-19 Relief talks.
USDCAD Technicals: The intraday technicals are bearish below 1.3180, the downtrend line from September 30. The test and failure to break 1.3180, suggests a retest of 1.3080. For today, USDCAD support is at 1.3120 and 1.3080. Resistance is at 1.3180 and 1.3240. Today’s Range 1.3110-1.3180
Chart: USDCAD 4 hour
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank