Forex news from the European trading session - 23 October 2020
Headlines:
- Ireland's Coveney: Brexit talks process is now 'back on track'
- Japan maintains overall economic assessment for the month of October
- UK October flash services PMI 52.3 vs 53.9 expected
- Eurozone October flash manufacturing PMI 54.4 vs 53.0 expected
- Germany October flash manufacturing PMI 58.0 vs 55.0 expected
- France October flash services PMI 46.5 vs 47.0 expected
- France's Le Maire: Q4 will show negative figure for French economy
- UK September retail sales +1.5% vs +0.2% m/m expected
- Germany reports 11,242 new coronavirus cases in latest update today
Markets:
- AUD leads, GBP lags on the day
- European equities higher; E-minis up 0.2%
- US 10-year yields up 0.5 bps to 0.861%
- Gold up 0.4% to $1,911.27
- WTI up 0.3% to $40.78
- Bitcoin down 0.9% to $13,000
The dollar was holding steadier to start the session but the market mood turned around after German manufacturing PMI for October beat expectations, highlighting some resilience seen in the economy despite the worsening virus situation.
Although there will still be questions surrounding Q4 economic conditions, the market is seeing a reprieve for now that at least things aren't turning dire just yet.
That led to a turn in sentiment, which saw the dollar being squeezed across the board. Meanwhile, European equities surged ahead with gains and US futures also turned around a softer start to keep slightly higher now ahead of North American trading.
EUR/USD broke above its 100-hour moving average @ 1.1814 as buyers seized near-term control in a push from 1.1804 to 1.1820 initially before extending to 1.1854.
USD/JPY also eased from 104.75 to 104.55 but have reversed the move in the past hour. Elsewhere, AUD/USD pushed to a fresh one-week high from 0.7115 to 0.7158 but is running into some resistance from its 38.2 retracement level @ 0.7158.
GBP/USD also gained from 1.3080 to 1.3113 but gains fizzled as the pound is finding it tough to rally further after the strong push on Wednesday.
As we look towards the weekend, US stimulus talks and election focus will dominate the proceedings once again. That could either help to carry the current mood or detract from it, so be wary of the headline risks that may follow.
Also, keep an eye on 10-year Treasuries as it approaches the 200-day moving average:
