ForexLive Americas FX news wrap: Lockdowns in Europe, election fears... what's not to like?

Author: Adam Button | Category: News

Forex news for New York trade on October 28, 2020:

Markets:

  • Gold down $31 to $1876
  • US 10-year note yields flat at 0.769%
  • WTI crude oil down $2.24 to $37.33
  • S&P 500 down 119 points to 3271
  • JPY leads, AUD lags
The combination of election uncertainty and rising covid cases was finally too much for the market to tolerate on Wednesday. The rout started in Europe but worsened throughout the day with few bounces on the way down.

If anything though, the FX market wasn't quite as spooked as equities; with the exception of AUD, CAD and NZD, which were hit particularly hard as commodity prices also plunged.

The Bank of Canada decision caused some small further CAD selling on the headlines but I'd chalk that up to sellers waiting in the wings and a deterioration in broader sentiment at the same time as the announcement.

Cable got a midday bounce on signs of positive progress in Brexit talks. It had been bouncing from 1.2900 ahead of the headlines and bounced to 1.3000 before some mild late selling.

USD/JPY hit the lows of the day just as New York arrived but carved out a bottom there and chopped sideways in a relatively uneventful trade even as sentiment worsened.

An interesting sidenote is that Treasury yields clawed back to unchanged on the day, recouping a 4 bps decline in 10s. That might be a sign of some reflexivity in the market; the belief that a stock market drop hurts Trump and thus makes a blue wave and larger fiscal spending more likely.

That said, gold didn't show any signs of a fiscal response even with Germany, France and Canada talking about more deficit spending. I'd argue that's typical and it usually takes a few days for gold to find a footing.

Forex news for New York trade on October 28, 2020:
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