October 27, 2020
- September Durable Goods rise1.9%-forecast 0.4%
- Rising COVID-19 cases, no US stimulus, and no direction for US dollar
- Global equities are down, Wall Street futures turn positive
- US dollar opens little changed from close
FX Ranges at a Glance -Monday open to Friday open
Source: IFXA Ltd/RP
FX Recap and Outlook: September Durable Goods rose for the fifth consecutive month, rising 1.9%, and easily beating the forecast of 0.4%. The Case-Shiller Housing Price index beat expectations rising 5.2% y/y in August, compared to the forecast for a 4.1% increase. Both reports indicate a stronger than expected US economic rebound.
The US dollar opened on a mixed note, but not too far from where it finished the day on Monday. FX markets were stifled due to lack of a coronavirus vaccine, lack of a US COVID-19 Relief package, and caution ahead of the US election Tuesday.
Rising numbers of positive coronavirus tests are disconcerting for markets, but not enough to stampeded traders into safe-haven assets. COVID-19 fatigue and hopes for a vaccine are making them complacent.
EURUSD is just above the bottom of its 1.1797-1.1835 range, undermined by falling Euro area equity indexes, dovish ECB expectations, and in a nod to the second wave coronavirus outbreak in major regions of the Eurozone. There were not any economic reports of note today.
GBPUSD traded quietly (for sterling) in a 1.3002-1.3043 range. Prices are supported by hopes for an 11th-hour reprieve from a “no-deal” Brexit, while Bank of England musings about negative interest rates and weak economic data, cap gains.
USDJPY traded narrowly in a 104.60-104.88 range. US election concerns, and a tiny dip in US 10-year Treasury yields, put a lid on the rally while bullish sentiment while prices are above 104.50 limited downside.
AUDUSD traded sideways and opened unchanged in NY while NZDUSD eked out a small gain.
Oil prices remain soft due to concerns about weak demand due to the second wave-coronavirus outbreak.
The shuttering of off-shore Gulf oil rigs ahead of Hurricane Zetamay limit the downside.
USDCAD inched lower in Asia and Europe with direction determined by broad US dollar moves vs the majors. Domestic issues such as massive federal budget deficits and rising coronavirus cases in some regions have little impact on prices. Instead, the direction is determined by the post-election outlook for the US economy, and that outlook is cloudy.
USDCAD Technicals: The intraday technicals are mixed: bearish while prices are below 1.3215, and bullish above 1.3140. Longer term, the March downtrend is intact below 1.3305. For today, USDCAD support is at 1.3140 and 1.3110. Resistance is at 1.3215 and 1.3250. Today’s Range 1.3150-1.3220
Chart: USDCAD 4 hour
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank