Commodity currencies extend gains
It's a momentum-driven market right now and the momentum is positive.
It was a back-and-forth battle for hours early in US trading but the mood has improved. Why? There's no easy answer. Powell and Mnuchin did their usual plea for fiscal support but none is coming. Numerous Republicans tried to walk back Trump's comments on a peaceful transfer of power.
I don't see any of those things as consequential. The headline from the weekly jobless claims report was slightly negative but continuing PUA claims fell to 11.5m from 14.5m in what could be good news but is more likely a reflection of the expiration of benefits.
So what's happening?
This is markets. It's the balance of fear and greed. You don't have to look back any further than March to see non-stop swings in momentum based on nothing in particular. I think there were some algos buying when the S&P 500 decline hit 10% but it's impossible to say how much.
Right now the biggest moves that are tracking stocks are in commodity currencies and EM FX. USD/CAD is at the lows of the day and now retesting the range from the start of the week.
What's next? I don't think the election jitters are going to go away but it will be an ebb and flow until then, with a close eye on economic data.
