Forex news for North American trading on October 5, 2020.

The roadmap for "the markets" followed the hopes for more stimulus. Treasury Secretary Mnuchin and Pelosi talked and shared new plan ideas. There is another scheduled meeting tomorrow. Better US data in the form of ISM services also was a boost. Although Trumps leaving the hospital is not a reason to rally directly, with Trump well behind in the polls and less than a month left until the elections, he is likely to come out of Walter Reed swinging and that could easily include putting additional pressure on the GOP to get something done for his political life and that of the GOP majority in the Senate (even though a deal may lean more the Dem's way). There are two more debates ahead and Trump aides say they will oppose a "mute" button (I don't know if that is good or bad).

The action today, led to "risk on" flows:

  • Yields moved higher with the 30 year up near 10 bps and the 10 year up 7.4 bps. A new stimulus deal being priced in and perhaps there is some yield concession ahead of the 3, 10 and 30 year auctions starting tomorrow.
Forex news for North American trading on October 5, 2020.
  • US stocks soared with the major indices closing at or near the session highs. The "risk on" was highlighted by not only the Nasdaq outpacing the S&P and Dow (2.32% vs 1.8% and 16.8% respectively), but the riskier small cap Russell 2000 out gained them all with a gain of 2.77%. Baby
The US major indices closed at session highs
  • In the forex, the flow of funds were into currencies other than the safe haven JPY and USD. The USD and JPY started the session as the two weakest of the majors and saw that weakness get larger in the NY session.
The strongest and weakest currencies for the day
  • Gold prices moved higher as the dollar fell. The precious metal rose by $13.77 or 0.72% to $1913.61. The high for the day reached $1918.81 while the low extended to $1887.04. The price of silver also increased. It is trading up $0.62 or 2.61% at $24.36 near the close for the day.
  • Crude oil futures rose and are hoping for a stimulus deal that would boost oil demand. The November WTI crude oil contract rose by $2.38 or 6.42% to $39.43 near the end of session.

From oil, to gold, to Forex, to stocks, to yields the flow of funds was into the risk today. Will that momentum now continue into the new trading day?