Forex news from the European trading session - 16 October 2020
Headlines:
- von der Leyen: Our team will go to London next week to 'intensify' negotiations
- EU did not interpret Johnson's statement as indication that UK is leaving Brexit talks
- UK PM Johnson: If there's a fundamental change, we are willing to listen
- UK PM Johnson: I have concluded that we should get ready for no-deal Brexit
- Pfizer says could apply for emergency use of coronavirus vaccine by late November
- Eurozone September final CPI -0.3% vs -0.3% y/y prelim
- ECB's Rehn: ECB could live with some inflation overshoot
- Italy reportedly weighs imposing curfew measure to limit virus spread
- Germany reports record rise in daily coronavirus infections, 7,334 cases today
Markets:
- EUR leads, AUD lags on the day
- European equities higher; E-minis up 0.3%
- US 10-year yields down 0.8 bps to 0.724%
- Gold up 0.1% to $1,909.95
- WTI down 0.8% to $40.62
- Bitcoin down 1.4% to $11,379
It was a quiet session for the most part but things really picked up in the final hour after UK prime minister, Boris Johnson, responded to the EU by calling to prepare a no-deal Brexit outcome by January next year.
That said, he was careful with his choice of words and trade talks in the meantime look set to continue so hopes for a Brexit deal are still very much alive.
At the end of it all, this week appears to have culminated in more Brexit posturing by both sides as negotiations are set to continue over the coming weeks still.
The pound was trading higher in hopes that Johnson will explicitly state that talks will be extended, with cable rising to 1.2960 before suffering a quick drop to 1.2865 after Johnson said that the UK will aim for an Australia-style deal i.e. no-deal outcome.
Thereafter, the barrage of headlines saw the pound rather whippy around 1.2880 to 1.2920 and is settling a little on the higher side currently as Brexit talks should continue.
Elsewhere, the risk mood was mostly tepid but improved slightly after Pfizer announced that they could apply for emergency use of their vaccine in late November.
The dollar is mildly weaker as such with EUR/USD rising from 1.1710 to 1.1740 while AUD/USD pared some of its early losses from 0.7075 to 0.7090.
Looking ahead, the pound will remain a key focus for now but expect stocks and risk to take cues from any more US stimulus headlines ahead of the weekend.
