Forex news for North American trading on October 29, 2020
- Earnings for the large cap businesses beat estimates but markets are picking apart the details
- Mnuchin says Pelosi has all or none approach on stimulus
- The coronavirus raging in Europe is a different variant
- Place your election bets
- Crude oil futures close lower but bounces off 50% retracement support
- North Carolina poll puts Biden ahead 48-45%
- US sells 7-year notes at 0.600% vs 0.588% WI
- German DAX snaps 3 day slide with a modest gain
- Bank of France's Villeroy: 2nd wave of Covid 19 will trigger another drop in French GDP
- UK Covid cases fall to 23,065 from 24,701 yesterday
- Italy Covid cases rise to 26,831 vs. 24,991 yesterday
- Pelosi hints at roadblocks to Biden's plan to raise corporate taxes
- US pending home sales for the month of September fell -2.2% vs. +3.0% estimate
- Lagarde Q&A: Recalibration means looking at all our instruments
- ECB's Lagarde: Recovery losing momentum faster than expected
- German October prelim HICP 0.0% vs 0.0% expected
- Jeremy Corbyn suspended from Labour party
- ECB holds rates, says will 'recalibrate' based on December forecasts
- US Q3 advance GDP +33.1% vs +32.0% expected
- Initial jobless claims 751K vs. 770K estimate
- The JPY is the strongest and the EUR is the weakest as NA traders enter for the day
The rebound quarter for GDP came out. Pres. Trump can boast of a record 33.1% annualized growth rate for GDP. That's the good news. Of course, it comes after 2nd quarter annualized GDP -31.4%.… Those numbers compare on quarter on quarter basis. The 2nd quarter GDP decline was -9%. The 3rd quarter GDP gain was 7.4%. So overall GDP growth is still below pre-pandemic levels but no denying the strong rebound. Looking at GDP details
- Consumer spending rose 41%.
- Business equipment spending rose 70%.
- Housing spending increased 59%
- Government spending fell by-4.5%.
With the calendar saying one month of the 4th quarter is nearly done, the 3rd quarter is old news. Onward and upward we go (or downward).
Other fundamental data included initial jobless claims which came in better-than-expected as 751K. The continuing claims also push lower by nearly 750,000K which is good news. Both numbers were at seven-month lows.
The ECB kept rates and bond buying steady, but Lagarde into that the potential for increased stimulus at the December meeting. Some negative comments included:
- Recovery losing momentum faster than expected
- Virus resurgence presents new challenges
- Consumers are cautious in light of pandemic
- Cites 'clear deterioration' in near-term outlook
- Virus is weighing on business investment
- Commits to keeping programs in place at least until covid is over
In other markets today:
- spot gold fell $10.80 or -0.58% to $1866.36
- spot silver is trading down $0.16 or -0.70% at $23.21
- WTI crude oil futures are trading down $1.32 -3.5% at $36.08. The price low reached all the way down to $34.92. That was just above the 50% retracement of the range since the April low
In the US debt market, yields moved higher today with the 10 year yield up 5.5 basis points and the 30 year up 5.16 basis points.
US stocks rebounded modestly after yesterday's sharp tumble:
- S&P index rose 1.19% after falling -3.53% yesterday
- NASDAQ index rose 1.64% after falling -3.73% yesterday
- Dow industrial average rose 0.52% after falling 3.43%
After the close, Apple back, Amazon, Facebook, Apple, Starbucks, Twitter all reported earnings. Each had their own individual stories - and most reported better numbers on the top and bottom line - but as the end the day approaches in after hours trading, Apple is trading down -4%, Starbucks is down -1%, Twitter is down -14.3%, Amazon is down -1.12%, Alphabet is up 7.4%, and Facebook is up 0.67%. I'm sure there will be more up and downvolatility before the open tomorrow and during the trading session as well.
In the forex market, the the US dollar close as the strongest of the majors. The EUR was the weakest (after the ECB decision).
Some technical notes for the major currency pairs for the day include:
- EURUSD: The EURUSD fell to test its 100 day moving average at 1.16488. The low price reached 1.16496 and stalled. Going into the new trading day the pair is trading around 1.1673. The 100 day moving average will continue to be a key barometer for the buyers and sellers. The last time the price traded below the 100 day moving average was back on May 27, 2020, when the moving averages at 1.0956.
- GBPUSD: The GBPUSD moved lower today and also stalled right near its 100 day moving average. The 100 day moving average came in at 1.28719. The low price extended to 1.2880 about 8 pips from the moving average level. The pair is currently trading at 1.2924 into the close. Like the EURUSD, the 100 day moving average will continue to remain as a key barometer for the buyers and sellers. Stay above, keeps the buyers in play. Move below and there should be more downside probing.
- USDJPY. The USDJPY tested the low for September at 103.995, with the low price reaching 104.018 and snapped back higher. The price extended back above its 100 hour moving average at 104.562 on its way to an intraday high of 104.722. the pair corrected down to test the 100 hour moving average in the last few hours of trading, but has been able to find modest buyers against the level. We currently trade at 104.62 in early new day trading. The 100 hour moving average will be the barometer for the buyers and sellers into the new trading day.
- USDCHF: The USDCHF was able to get above swing highs from mid-October in the 0.9162 to 0.9164 area. The high price moved up to0.9171 but could not sustain momentum. The pair has closed day near 0.9155. Going into the new trading day traders will be looking to see if that 0.9162 – 64 area can't hold resistance. Stay below and there should be a rotation back lower on the failed break. Move above and buyers remain firm control.
- USDCAD: The USDCAD squeeze above its 100 day moving average 1.33284 for the 1st time since the beginning of June 2020. However momentum could not be sustained and the price is closing just below that level at 1.33284. The moving average will become the barometer in the new trading day. Move back above and we should see further upside momentum. Stay below a rotation back toward the 1.3246 – 1.3265 area would be the next target support.
