Forex news for North American traders on October 14, 2020
- German Chancellor Merkel says in a serious stage of the COVID-19 pandemic
- More from Fed's Quarles - costs of negative rates have outweighed their benefits
- Major indices close lower for the 2nd consecutive day
- Kudlow: Mnuchin is frustrated with stimulus negotiations
- Fed's Kaplan: Experience of March makes me more concerned about ability to monitor risk-taking
- In call Johnson noted desirability of a deal but lamented lack of progress
- Fed's Quarles says he's optimistic recovery will continue to be robust
- WTI crude oil futures settle at $41.04
- France imposes curfew in major cities not no national lockdown
- Mess in California is likely skewing US initial jobless claims higher
- CDC reports 47,459 new US cases vs 46,614 yesterday
- Mood sours after Mnuchin highlights differences on stimulus
- European major indices end the session with mixed results
- Mnuchin: On certain issues, stimulus talks are still far apart
- Pelosi and Mnuchin spoke for 1 hour earlier today; talk was 'productive'
- ECB's de Cos: Spanish growth momentum has weakened lately
- Election odds are a reminder that generals always fight the last war
- Fed's Clarida: Perhaps another year before US GDP reaches pre-pandemic peak
- Fed's Barkin: Unemployment adjusted for the drop in participation is around 11%
- US September PPI +0.4% m/m vs +0.2% exp
- The GBP is the strongest and the EUR is the weakest as NA traders enter for the day
The GBP was the strongest of the major currency pairs as the UK signaled that Brexit talks would continue beyond PM Johnson's October 15 deadline given the will to make a final push toward an accord.
That news helped to propel the GBPUSD (and GBP pairs) higher. The GBP is ending the day as the strongest of the major currencies.
The trading ranges for the GBP pairs were also well above what has been the averages over the last 22 days (about a month of trading). The GBP pairs were off their session highs but kept most of their gains (see the charts below).
The weakest currencies today were the CAD and the USD.
In other markets today:
- Gold and silver advanced in reaction to the lower dollar. The price of spot gold is trading up $9.60 or 0.51% at $1900.98. The price of silver is up $0.11 or 0.49% to $24.25
- In the crude oil market, the November contract rose by $0.91 or 2.26% to $0.1 to $41.11. That is near the high price for the day at $41.16. The low for the day reached $39.82.
- Natural gas went the other way with a decline of near $0.20 or close to 7% to $2.66
In the North American and European stock markets, the major European indices closed with mixed results. Spain's Ibex led the way with a 0.6% gain. The UK FTSE 100 was the worst performer at -0.58%. The German DAX was near unchanged at +0.07%.
In the US stock market, the major indices fell for the 2nd consecutive day. The NASDAQ index led the way with a -0.8% decline. The Dow industrial average fell by -0.58%.
On the fundamental front today, the only economic release was September PPI which rose by 0.4% month-to-month vs. 0.2% expected. Ex food and energy also advanced by 0.4% vs. 0.2% expected. Ex food and energy year on year increase to 1.2% vs. 1.0%.
The stimulus talks continue to get nowhere in the US. Speaker Pelosi and Treasury Secretary Mnuchin talked once again but did not reach a coronavirus aid agreement. They plan to speak again on Thursday. Mnuchin did say that getting something done before the election and executing on that would be difficult. Those comments helped to push the stock market lower today.
In France day, the French government declared a state of emergency. In the UK new sanctions could be going into place in a matter of days. The number of cases across Europe are now higher than the number of cases in the US.
Some technical levels to watch and to the new trading day:
- EURUSD: The price range in the EURUSD stalled the technical support and technical resistance. More specifically the low stalled near the 50% retracement of the move up from September 25. That level comes in at 1.17211. The high stalled near the 200 hour moving average at 1.1769. The pair is trading around 1.1746 into the close. Those levels will be used by traders in the new trading day to be there were leaning against or react to on a break.
- GBPUSD: The GBPUSD fell sharply yesterday from a high of 1.30672, and continued the run lower to a low of 1.2862. After bottoming, the price rose sharply reversing nearly the entire move lower. The high price today stalled at 1.30636 just 4 pips from yesterday's high. The 1.2999 to 1.3006 has been a swing level going back to October 6. The low price off of the high today stalled right near the 1.3006 and the pair is closing the day also near that level. If the buyers can hold support against 1.2999 (call it 1.3000), they will remain in control in the new day. A move below the 1.3000 will tilt the intraday bias back in the favor of the sellers.
- USDJPY: The USDJPY fell to test the 50% retracement of the move up since the September 18 below. That level comes in at 105.049. A move below that level in the new trading day should solicit more probing to the downside with support at 104.92-94 as the next target to get to and through followed by the 61.8% retracement at 104.80. Conversely, hold support at 105.049 and a rotation back above 105.25 would be more positive from a technical perspective
- AUDUSD: The AUDUSD moved higher in the US morning session but stalled at the 100 hour MA at 0.71897. The and ability to get above that level took the price back below its 200 hour moving average at 0.71723. The price into the close straight around 0.7160. In the new trading day, stay below that level would keep the bears more in control. Move above and the ups and downs continue for the pair (with buyers taking back a little more control).
