Forex news from the European morning session - 26 October 2020
Headlines:
- Bundesbank: German economic recovery continuing at a much slower pace
- Ifo economist: German economy growing more nervous as coronavirus infections rise
- Germany October Ifo business climate index 92.7 vs 93.0 expected
- SNB total sight deposits w.e. 23 October CHF 706.9 bn vs CHF 705.1 bn prior
- Italian bonds bolstered after S&P ratings boost
- China says to sanction Boeing Defense, Lockheed Martin over Taiwan arms sale
- French government scientific advisor: There are some 100,000 new coronavirus cases a day in France
- Oxford coronavirus vaccine trials reportedly produce robust immune response in elderly people
- Australia's Victoria state premier says outbreak is now under control, time to open up the economy
- Germany reports 8,685 new coronavirus cases in latest update today
Markets:
- GBP leads, CAD lags on the day
- European equities lower; E-minis down 1.0%
- US 10-year yields down 3.3 bps to 0.809%
- Gold up 0.1% to $1,904.40
- WTI down 2.2% to $38.95
- Bitcoin up 1.6% to $13,154
The session began with risk assets tilted to the defensive side as virus jitters resurface, with the situation seen worsening in the US and across Europe as well.
The stimulus stalemate in Washington isn't helping with sentiment and that saw European stocks and US futures keep lower initially, before getting a bit of an extra knock lower amid ongoing tensions between US and China.
S&P 500 futures fell by as much as 1.1% and continues to hug the lows ahead of North American trading. Meanwhile, the DAX is keeping over 2% losses on the session.
In the major currencies space, the dollar was firmer across the board initially but gave some of the gains away. However, it maintained its advance against the euro and loonie with the two currencies weighed down by virus jitters and lower oil prices respectively.
EUR/USD fell from 1.1845 to 1.1803 as price action keeps in between the key hourly moving averages and just above some support close to 1.1800 for the time being.
The pound got a bit of a nudge higher as a weaker euro saw EUR/GBP slip, thus underpinning cable in a push from 1.2993 near its 200-hour moving average to 1.3050-60.
USD/CAD is staying underpinned near the highs on a break above its own 200-hour moving average @ 1.3160 to near 1.3200 currently.
Elsewhere, AUD/USD was weighed lower to start the session close to 0.7100 but buyers kept a defense of its key hourly moving averages to bounce to 0.7130 levels now.
Looking ahead, virus jitters have announced its return to the market and will be a factor to contend with moving forward. But this week, things will be more complicated with the US election in focus so the market may lack any firm conviction as such.
