Forex news for September 30, 2020.
- Mnuchin says there is still no agreement on stimulus deal
- Seasonals: October tends to be a strong month for US equities, except in election years
- Mnuchin has left Pelosi's office. Waiting on comment
- Crude oil futures settle at $40.22
- McConnell: Republicans and Democrats are far apart of virus relief
- Moderna says its vaccine won't be ready before US election
- CAD is stronger today but there are cracks in the big-city condo market
- The Mnuchin-Pelosi meeting hasn't been a short one
- Fed's Bowman: Data suggests US is recovering at a rapid pace
- White House's Meadows says he's seen substantial movement on a stimulus deal
- September seasonal scorecard: Selling gold worked
- Senate Majority Leader McConnell: Pelosi's latest aid bill has poison pills
- European indices close with mixed results
- Weekly EIA oil inventory report -1980K vs +1000K expected
- US pending home sales for August +8.8%% vs. +3.1% estimate
- "Who will win the election?" is the wrong question
- Mnuchin on stimulus: "We're going to give it one more serious try to get this done, we're hopeful"
- Germany says delays in EU recovery fund is most likely unavoidable
- Barkin: Fed guidance will be 'particularly powerful' as economy comes back
- ECB's Villeroy talks about symmetrical inflation target
- US final GDP for 2Q -31.4%% vs -31.7% estimate
- Canada July GDP +3.0% vs +2.9% m/m expected
- Layoff announcements are more ominous than jobs reports
- The USD is the strongest and the CHF is the weakest as NA traders enter for the day
- ADP September employment +749K vs +649K expected
After the debacle called a Presidential Election Debate last night, it seemed that the Dems, and GOP woke up from the nightmare with ideas of potentially reaching some sort of agreement on a new stimulus deal. After all the threat of voting everyone out come November was seeming like a good idea by the American people.
Also helping the "Deal on" sentiment, was news that Disney, Continental, Shell, Marathon Petroleum and Dow Chemical were looking toward cutting jobs. Of course, there are the airlines as well who are sitting on a knifes edge wondering if there will be more bailout funds before they give up on their employees as well. Oh....did I mention small to mid-sized companies which are about to throw in the towel as the reopening sputters and fears of a 2nd wave (or is it still the first wave) grows.
All that had Treasury Secretary Mnuchin saying he was going to give it "one more try" for a new stimulus deal. House Majority Leader Pelosi was also hopeful. White House's Meadows said "he's seen substantial movement on a stimulus deal".
As a result, stocks moved higher, the dollar started to move lower, gold prices moved higher as did yields on treasuries and crude oil futures. The risk on flows were flourishing in all markets.
Also helping risk-on was better economic data.
- The ADP employment for September came in better-than-expected at 749K vs. 649K estimate
- The Chicago PMI unexpectedly jumps to 21-month high of 62.4
- US pending home sales rose by 8.8% vs. 3.1% estimate and increased by 20.5% year on year. Housing remains on fire as a result of the suburbanization trend.
Finally, if all that wasn't enough, there seemed to be some month-end/quarter-end dollar selling in the hour leading to and through the London fixing (at 11 AM ET). In that hour or so into the fixing and just after it:
- The GBPUSD moved from 1.2850 to 1.2942 during that time and trade to the highest level since September 21
- The EURUSD move from 1.1690 to a NY session high at 1.1751
- The USDCHF moved from 0.9244 to 0.9162
- The USDCAD started a move lower that saw it's pair fall from 1.3387 to a day low at 1.3301 (before finding some buyers).
The other currencies vs the USD saw gains as well (dollar selling).
However, things started to turn the other way after Senator McConnell warned before the meeting that House Majority Leader Pelosi's latest aid bill had "poison pills". Later a couple headlines, one saying Moderna said it's vaccine won't be ready before the US elections, and the other saying Republicans and Democrats are still far apart on a virus relief bill. Whoops.
The risk on flows saw some reversals of the earlier moves and market started to reprice a no deal.
As the dust settled into the close, the USD is still ending the session lower for the most part (it did rise vs the EUR and the CHF), but it was also off the lows for the day.
The snap shot of the winners and losers shows the CAD and AUD were the strongest, while the CHF and the EUR were the weakest.
In the US stock market, all the indices closed higher but well off there highs for the day. European shares ended mostly lower.
In other markets,
- Gold give up its gains above $1900 (the high price reached $1902.35), and is trading at $1885.42, down $12.60 or -0.66%
- spot silver is also trading lower by $0.94 or -3.92% at $23.24
- WTI crude oil futures are still higher by $0.56 or 1.43% at $39.85, but well off the high price of $40.37.
- US yields on the longer end are down about 3 to 4 basis points from their high yield for the day.
Tomorrow is another day with hopes for some sort of compromise/agreement. However, the clock is ticking down. With employment report due on Friday and expected to show another decent gain of about 800,000 to 900,000, one has to wonder if that might be the last of the good numbers if additional stimulus is not provided to those businesses in need.
