November 19, 2020
- 166,116 new US COVID-19 cases in US: NYC closes public schools
- Brexit weighing on EUR and GBP
- US weekly jobless claims rise 742,000
FX Ranges at a Glance
Source: IFXA Ltd/RP
FX Recap and Outlook: The morning US data dumpshowed weaker than expected initial jobless claims data and mixed results for the Philadelphia Fed Manufacturing Survey. Jobless claims rose742,000 compared to forecasts for 707,000 while the Philly Fed data was stronger than forecast at 26.3 than the previous.
Traders have changed foresight to short-sight, and it is showing up in global equity indexes and safe-haven currencies. The earlier “risk-on” euphoria around vaccine breath-throughs wore off as new COVID-19 cases soared, and officials began re-introducing containment measures. Ontario is on the cusp of a new lockdown, NYC closed public schools, and different states are adopting various measures. Large parts of Europe and the UK are already under some form of restrictions.
That reality drove Wall Street into the red yesterday. Asia equity indexes were mixed-China, and Australia closed in the green, while Japan’s Nikkei 225, and Hong Kong’s Hang Seng finished in the red. European bourses are down, but off their worst levels and US equity futures point are close to flat.
President Trump continues to squat in the White House, while Joe Biden’s U-Haul circles the grounds. It would be hilarious if it were not the most powerful, heavily armed country in the world. Can you imagine US State Department diplomats in communist or dictator-led nations telling those citizens “Embrace democracy-be more like us.”
EURUSD broke support at 1.1850 in thin Asia markets and spent the rest of the overnight session bouncing between 1.1817-1.1855. Prices are weighed down by safe-haven demand for US dollars, and uncertainty over Brexit.
ECB President confirmed that central banks could print money until they run out of ink and or/paper. She responded to a question and said: “As the sole issuer of euro-denominated central bank money, the Eurosystem will always be able to generate additional liquidity as needed. So, by the definition, it will neither go bankrupt nor run out of money. In addition to that, any financial losses, should they occur, would not impair our ability to seek and maintain price stability.
Her comments should be a huge negative for the Euro, but all the central banks think and act the same way.
GBPUSD is at the top of its 1.3206-1.3260 range. Traders were unperturbed about weak Manufacturing data, or COVID-19, and instead are hoping for a Brexit deal in the next few days. Things may get more exciting on Friday when EU Chief Trade Negotiator Michel Barnier updates the EU members.
USDJPY rallied from 103.73 to 104.21 supported by a rise in 10 year US Treasury yields from 0.84% to 0.89%. Prices dipped to 104.00 as yields retreated. The technical picture is bearish while prices are below 104.70.
AUDUSD did not get any benefit from a stellar jobs report. Australia added 178,800 jobs in October, and the unemployment rate fell to 7.0% from 7.2%. Instead, AUDUSD dropped from 0.7304 to 0.7256 on safe-haven demand for US dollars. NZDUSD followed suit.
Ongoing coronavirus fears in major US cities and the looming US Thanksgiving holidays will drive trades.
USDCAD Technicals: USDCAD continues to dance the 1.3050-1.3150 two-step. The downtrend from March is intact but major support at various levels between 1.2950 and 1.3040 is curtailing selling enthusiasm. For today, USDCAD support is at 1.3060 and 1.3020. Resistance is at 1.3020 and 1.3150. Today’s Range 1.3060-1.3140
Chart: USDCAD 1 hour
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank