Picture: Wikimedia commons
October 16, 2020
- US Retail Sales Surge 1.9% in September
- FX markets choking on COVID-19 concerns
- Hopes for Brexit deal still alive
FX Ranges at a Glance
Source: IFXA Ltd/RP
FX Recap and Outlook: The number of new coronavirus cases in the US, topped 60,000 yesterday. Perhaps the rise in cases is related to the 1.9% surge in September Retail Sales, which was over double the 0.7% increase that was expected. FX traders barely reacted to the news.
FX markets were rangebound and relatively quiet. Risk -aversion fears flitted around the edge as COVID-19 outbreaks, Brexit, and US political theater vied for attention. Asia equity markets closed on a mixed note, while European bourses climbed, led by a 1.6% rise in the French CAC 40. US futures are modestly higher as well.
US stimulus talks are still alive with Treasury Secretary Mnuchin, and Democrat House Leader Nancy Pelosi, still talking.
EURUSD traded in a tight 1.1695-1.1722 range, weighed down by the same trio of concerns evident this week: constant coronavirus fears, Brexit, and dovish comments from ECB officials.
The intraday technicals are bearish, looking for a break below support in the 1.1665-80 area to extend losses.
Traders ignored Eurozone Trade and inflation data. September CPI fell 0.3% y/y, as expected.
GBPUSD rallied from a low of 1.2884 to 1.2962. The Brexit talks are continuing under UK Prime Minister Boris Johnson threat to walk away if a deal isn’t completed today. Conciliatory comments from Germany’s Angela Merkel suggesting the EU would need to compromise on fishing rights continue to underpin prices.
FX trading was quiet in Asia. USDJPY drifted in a narrow 105.20-44 band, while AUDUSD and NZDUSD consolidated losses from earlier this week.
USDCAD rallied on the back of broad safe-haven demand for US dollars, following “second-wave” pandemic fears in Europe and the UK, alongside a surge in positive COVID-19 tests in Canada. August Manufacturing Sales fell 2.0% m/m, which was a bit of payback from July’s upwardly revised 7.2% result. The news was ignored by USDCAD traders.
USDCAD Technicals: The break above 1.3150 led to a test of the two-week, downtrend line at 1.3250. It held, and prices consolidated in a 1.3202-1.3236 range overnight. A break above 1.3260 targets the April downtrend line at 1.3360, while a move below 1.3160 will lead to 1.3100. For today, USDCAD support is at 1.3190 and 1.3140. Resistance is at 1.3240 and 1.3290. Today’s Range 1.3190-10
Chart: USDCAD daily
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank