Forex news from the European trading session - 23 November 2020
Headlines:
- EU's Barnier: Fundamental divergences remain, continuing to work hard for a deal
- Brexit: Rumours of a "temporary deal" in the works to be agreed this week
- UK November flash services PMI 45.8 vs 42.8 expected
- SNB total sight deposits w.e. 20 November CHF 707.3 bn vs CHF 707.9 bn prior
- Eurozone November flash services PMI 41.3 vs 42.0 expected
- Germany November flash manufacturing PMI 57.9 vs 56.0 expected
- France November flash services PMI 38.0 vs 39.0 expected
- ICYMI: The mood music fuels hopes of a Brexit deal
- AstraZeneca says its vaccine prevents average of 70% of coronavirus cases
- China warns that relations with the US will not automatically get better under Biden
- Germany reports 10,864 new coronavirus cases in latest update today
Markets:
- GBP leads, USD lags on the day
- European equities higher; E-minis up 0.5%
- US 10-year yields up 3.3 bps to 0.857%
- Gold down 0.2% to $1,868.10
- WTI up 1.1% to $42.90
- Bitcoin up 0.1% to $18,610
Yet another hopeful Monday. That seems to be the theme for November trading, with the market getting another boost (though a smaller one) from vaccine optimism.
AstraZeneca/Oxford revealed the latest results of their vaccine study and it was encouraging, adding to the already good news from Pfizer and Moderna over the past two weeks.
That helped to give risk assets a slight lift on the session but the overall mood was already cautiously optimistic, with perhaps the market drawing some bids after the late drop in Friday trading for US equities as well.
US futures got a slight nudge higher from 0.3% to 0.6% during the session and kept most of the gains with European equities opening higher and then climbing to 1% gains, before paring most of that back to near opening levels again currently.
In the currencies space, the pound is hogging the spotlight as the mood music surrounding Brexit talks continue to be more optimistic and upbeat.
Cable was sitting higher around 1.3320 to start the session but extended gains towards the highs now with little in the way stopping buyers from a retest of 1.3400.
The dollar was the weakest performer as it gradually lost ground against the rest of the major currencies bloc, seeing EUR/USD climb from 1.1870 to 1.1900.
Commodity currencies are also posting a modest advance against the greenback, with AUD/USD moving up from 0.7310-20 to 0.7337 and is just sitting under there with some short-term resistance seen closer towards 0.7340.
Meanwhile, NZD/USD is posting solid gains as we see buyers flirt with a retest of the December 2018 high of 0.6969 as the kiwi keeps firmer throughout the day.
It is still largely all about the push and pull in risk this week and we're off to yet another familiar start, with investors having to try and work through sentiment and key technical levels to identify which direction the next shove is going to happen.
However, amid a holiday-shortened week (Thanksgiving on Thursday), the next few days may see some month-end rebalancing flows come into play as well so just be mindful of that as it could muddy the trading picture this week.
