Forex news from the European morning session - 30 October 2020
Headlines:
- Eurozone October preliminary CPI -0.3% vs -0.3% y/y expected
- Eurozone Q3 preliminary GDP +12.7% vs +9.6% q/q expected
- ECB's Mersch says to discuss flexibility of instruments in December
- ECB's Mersch: It is our firm intention to play our role in the second wave of the pandemic
- Italy Q3 preliminary GDP +16.1% vs +11.1% q/q expected
- Germany Q3 preliminary GDP +8.2% vs +7.3% q/q expected
- Spain Q3 preliminary GDP +16.7% vs +13.5% q/q expected
- France October preliminary CPI 0.0% vs +0.1% y/y expected
- ECB's Holzmann: It is right to assume Lagarde signaled more stimulus to come
- UK October Nationwide house prices +0.8% vs +0.4% m/m expected
- France Q3 preliminary GDP +18.2% vs +15.0% q/q expected
- Germany posts record 18,681 new coronavirus cases in latest update today
- What does the record US GDP rebound really look like?
Markets:
- GBP leads, CHF lags on the day
- European equities mixed; E-minis down 0.6%
- US 10-year yields up 0.5 bps to 0.828%
- Gold up 0.4% to $1,874.95
- WTI down 0.1% to $36.12
- Bitcoin down 1.6% to $13,265
The risk mood was tilted towards being more defensive to start the session, with US futures slumping by over 2% and European stocks got off to a softer open.
But since then, things were much calmer as equities pared losses while major currencies kept more choppy throughout. S&P 500 futures are now down by just 0.6% after having been down by about 2.2% earlier in the session.
There was little change among major currencies initially but as sentiment improved, we are seeing the dollar slightly retrace some of the gains from yesterday.
GBP/USD inched higher from 1.2930 to 1.2984 but isn't really threatening its 100-hour moving average closer to the 1.3000 handle just yet.
USD/JPY was lower around 104.13 at the end of Asian trading, but has gradually crept higher to 104.40 levels though large option expiries are still playing a role in anchoring price action between 104.00 and 104.50 for the time being.
Elsewhere, AUD/USD also bounced from a low of 0.7012 to 0.7041 but there isn't much to really take note of in terms of technical significance.
Euro area GDP data for Q3 beat out expectations, reaffirming a stronger recovery, but the euro is little changed at 1.1670-80 for the most part. The focus for the single currency is more on Q4 developments with the ECB set to ease further in December as well.
Looking ahead, risk may be scaling back on the jitters earlier but just be mindful of month-end flows today with this being the weekend before the election, so there might be some consideration for risk positioning to be more cautious.
