Forex news from the European trading session - 29 October 2020
Headlines:
- What's the trade if Trump steals the election this year?
- ECB's Jochnick: The possibility of a double-dip recession cannot be ruled out yet
- Eurozone October final consumer confidence -15.5 vs -15.5 prelim
- UK September mortgage approvals 91.5k vs 76.1k expected
- Germany October unemployment change -35.0k vs -5.0k expected
- Spain October preliminary CPI -0.9% vs -0.4% y/y expected
- Saxony October CPI 0.0% vs +0.1% y/y prior
- The US election is going to act as a stimulus vote for the market
- Germany says optimistic that 'lockdown light' can prevent hospitals from being overwhelmed
- Of lockdowns and the ECB
- Germany posts record 16,774 new coronavirus cases ahead of November 'lockdown light'
Markets:
- JPY leads, EUR lags on the day
- European equities lower; E-minis up 0.1%
- US 10-year yields up 0.3 bps to 0.774%
- Gold down 0.1% to $1,876.00
- WTI down 4.1% to $35.87
- Bitcoin down 0.5% to $13,142
It was a largely quiet session as the market waits on the ECB but I reckon things could really heat up later on as optimism is fleeting in European morning trade.
The market kept calmer for the most part as investors retraced some of the sharp losses from yesterday. But things are turning in the last hour, as we see US futures erase gains of over 1% to near flat levels now.
European indices had a choppy start but kept mostly higher throughout, before turning lower now as sentiment is starting to get rocked once again.
A more dovish tone by the ECB and Lagarde later on may just tip things over once again after the rout yesterday.
In the currencies space, the dollar was a little softer initially but is now pushing higher ahead of Norther American trading as such.
EUR/USD has eased from 1.1740 to near 1.1700 while GBP/USD is unable to keep gains above 1.3000 for long in a drop to 1.2940. Elsewhere, AUD/USD also slumped from 0.7070 to 0.7025 while NZD/USD declined from 0.6650 levels to 0.6620.
All of this just reaffirms that the near-term bias continues to favour the dollar for now as we start to stretch the technical levels once again after the moves yesterday.
I reckon the market is starting to come to terms with having to price in a more contested election, or at least the uncertainty associated with it, so that is part and parcel of what is transpiring - not to mention month-end flows as well.
I fear that if the market gets another trigger for a push lower, things are going to turn ugly again today. That is something to watch out for later today, if not at least ahead of the weekend tomorrow.
