Forex news from the European trading session - 6 October 2020
Headlines:
- Brexit: EU reportedly ready to call UK's bluff on Brexit talks
- Pelosi said to say stimulus talks are going 'very slowly'
- Fed's Bullard: I like monetary policy right now
- ECB's Lagarde repeats that they do not target the euro exchange rate
- Brexit: EU negotiating team reported to head to London tomorrow
- ECB's Lagarde: Recovery is incomplete, uncertain, uneven
- Australia forecasts budget deficit of A$213.7 billion in 2020-21
- UK September construction PMI 56.8 vs 54.0 expected
- Germany September construction PMI 45.5 vs 48.0 prior
- Scotland to impose two-week mini lockdown from Friday - report
- Germany August factory orders +4.5% vs +2.8% m/m expected
- RBA announce no change to monetary policy, as expected
Markets:
- CHF leads, AUD lags on the day
- European equities a little higher; E-minis down 0.2%
- US 10-year yields down 1.3 bps to 0.768%
- Gold up 0.2% to $1,917.40
- WTI up 1.5% to $39.85
- Bitcoin down 0.5% to $10,688
It was a largely sluggish session with the market showing little poise to break away from the more cautious start to the day, though the pound got hit close to midday in London as Brexit pessimism struck once again to drag the quid lower.
A Bloomberg report made mention that the EU is willing to let Brexit talks run down to the wire and are wanting to call the UK's bluff in walking away without a deal.
That sent cable lower from 1.2960 to 1.2917, testing support from its 100-hour moving average before bouncing a little to move closer towards 1.2950 currently.
Equities were more mixed in general, with European indices holding slight gains but US futures are on the defensive with Nasdaq futures struggling a little after this earlier report.
That kept major currencies more in a bind with EUR/USD bouncing between 1.1770-00 for the most part with the 1.1800 handle limiting gains on the day still.
The yen is also keeping some mild gains with USD/JPY down at around 105.55-65.
Meanwhile, AUD/USD nudged a little higher to 0.7209 following the RBA policy decision but crept lower in the aftermath towards 0.7150 levels and never really did much after.
The dollar and risk in general is still largely taking cues from US stimulus talks and that will be the key focus point in the market later today.
But just be mindful that we will still be hearing from Lagarde and Powell as well as other ECB and Fed members in the session ahead, so keep your eyes and ears peeled in case.