Forex news from the European trading session - 22 October 2020
Headlines:
- UK finance minister Sunak announces additional support for businesses
- UK October CBI trends total orders -34 vs -50 expected
- BOE's Haldane: We are studying negative rates, but doesn't mean it will be used
- Germany RKI warns that must anticipate uncontrolled spread of the coronavirus
- France October business confidence 90 vs 92 expected
- Germany November GfK consumer confidence -3.1 vs -3.0 expected
- Germany reports a record 11,287 new coronavirus cases in latest update today
Markets:
- NZD leads, GBP lags on the day
- European equities mixed; E-minis down 0.2%
- US 10-year yields down 1.3 bps to 0.809%
- Gold down 0.5% to $1,915.11
- WTI up 0.8% to $40.34
- Bitcoin up 0.8% to $12,958
It was a largely quiet session as the market paused for a bit of a breather amid the Brexit and US stimulus hustle and bustle. As such, the dollar managed to come up for a bit of air as it retraced some of the declines from yesterday.
The mood in equities was more muted, with European stocks trading lower initially before seeing more flattish trading at the moment. Elsewhere, US futures were more subdued in the early morning but trimmed losses now ahead of North American trading.
Virus concerns continue to present a considerable risk to European assets, with Germany today reporting a record daily jump in cases surpassing 10,000 earlier.
The euro is seen softer on the day but owes more to the dollar retracing some of its downside move from yesterday, with EUR/USD easing from 1.1850 to 1.1816.
Meanwhile, cable also fell from 1.3120 to 1.3084 before lingering closer to 1.3100.
AUD/USD sits a little lower close to 0.7100 as price action continues to bounce between its key hourly moving averages for now. USD/JPY was more quiet around 104.60-70 for the most part, with large expiries at 104.50 something to be wary about today.
The dollar has managed to regain its footing on the day but from a technical perspective, the greenback's advance isn't amounting to much for the time being.
A pre-election stimulus deal is almost certainly off the table so the question for the market now is whether or not investors see a deal in the lame duck session. Cautious tones are prevailing for now, but be wary of more headline risks in the session ahead.
