Daily thread to exchange ideas and to share your thoughts

Risk aversion grips the market as we look towards European morning trade, following news of Trump testing positive for the coronavirus after his close aide, Hope Hicks, also tested positive for the disease late yesterday.

WCRS 02-10

The initial reaction is that of added uncertainty to the US election race, with stocks falling and flows going into the dollar and yen as a result.

S&P 500 futures were down by ~0.2% initially but have now fallen by ~1.5%. USD/JPY has eased from 105.50 levels to 105.26 currently as sellers look to try and seize near-term control in the pair on a break below the 200-hour moving average @ 105.39.

Elsewhere, EUR/USD fell from 1.1715 to just under 1.1700 briefly but is trading back towards 1.1715 currently with large option expiries at 1.1700 and 1.1750 a consideration in trading today - not to mention near-term support @ 1.1693-09.

Trump's news is creating some distraction from the US jobs report later today and that will make trading a little more tricky as we approach the weekend.

The elements of risk aversion here is in large parts due to the uncertainty on how that will impact the US election race. However, unless Trump's health situation deteriorates significantly, it is hard to see this as having a lasting impact.

That said, the market could switch to that view in the next hour or it could only do so next week or until this whole thing blows over. This is a market that trades highly on emotion and the latest development only adds to that.

For now, emotions are running high as the world goes nuts in feeding the echo chamber with Trump's story and that might keep the risk averse mood flowing until the weekend.

What are your views on the market right now? Share your thoughts/ideas with the ForexLive community here.