October 14, 2020
- Boris extends deadline for EU/UK Trade deal
- Global equities wobble as COVID-19 vaccine tests disappoint
- Hopes for a US Stimulus package fade
FX Ranges at a Glance
Source: IFXA Ltd/RP
FX Recap and Outlook: GBPUSD provided the entertainment in an otherwise bland FX session. Global equity markets were uninspiring. Asia closed flat, while European bourses and US equity futures are modestly higher. Crude prices slumped, while gold managed to squeeze a tad higher compared to yesterday’s close.
The resurgent coronavirus has resulted in new restrictions imposed in parts of the UK, while Holland has announced a partial lockdown. France is expected to get more restrictions after a hospital group official warned that intensive care beds could reach 90% occupancy by next week.
GBPUSD continues to bounce erratically from self-inflicted wounds. The EU/UK trade talks are going hot and heavy ahead of Boris Johnson’s October 15 deadline for a deal. Yesterday, headlines warning that France and Spain would veto any deal that changed existing fishing terms contributed to GBPUSD plunging from 1.3067 to 1.2865 overnight.
Prices rallied sharply just before NY opened and in early trading, and touched 1.2979 after the UK Express reported Boris scrapped his deadline.
EURUSD traded with a negative bias. The re-imposition of coronavirus measures in many regions and soft data is weighing on prices, as are dovish comments from ECB officials. The intraday technicals are bearish below 1.1780, looking for a break below 1.1710 to lead to 1.1680.
USDJPY is in a mild downtrend while prices are below 105.60, thanks to the failure of the US government to pass another COVID-19 relief bill, and news of vaccine testing failures.
AUDUSD and NZDUSD traded in narrow ranges. AUDUSD got a bit of support from better than expected Westpac Consumer Sentiment data (actual 11.9% vs forecast 9.9%)
Traders are looking ahead to a speech from RBA Governor Philip Lowe.
USDCAD rose as EURUSD sank while underperforming against the AUDUSD and NZDUSD. Canada’s escalating budget deficits, federal tax increases due to climate change charges, and a resurgence of coronavirus cases in parts of Ontario, and Quebec, are supporting prices. USDCAD is also pinned by steady, but low oil prices.
Today’s Fed speakers include Vice Chair Richard Clarida and Richard Quarles. US Producer Prices data is on tap. Traders will be watching Wall Street as earnings season began yesterday.
USDCAD Technicals: USDCAD is mildly bullish inside a narrow 1.3105-1.3150 range. A topside break will target 1.3240, a downside break puts 1.3010 in play. For today, USDCAD support is at 1.3110 and 1.3060. Resistance is at 1.3150 and 1.3190. Today’s Range 1.3110-1.3210
Chart: USDCAD 4 hour
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank