Posted at 16 October 2020 / Categories Market Roundups
Economic Data Ahead
Key Events Ahead
DXY: The dollar index held firm near a 2-week peak as additional U.S. fiscal stimulus appeared unlikely before the presidential election. President Donald Trump said on Thursday that he was willing to raise his offer of $1.8 trillion for a COVID-19 relief deal, but the idea was shot down by Republican Senate Majority Leader Mitch McConnell. The greenback against a basket of currencies traded 0.05 percent up at 93.80, having touched a high of 93.90 on Thursday, its highest since October 2.
EUR/USD: The euro eased, hovering towards a 2-week low hit in the prior session as fresh curbs to combat COVID-19 were introduced in Europe and Britain. The pair fell 0.3 percent overnight and has lost about 1 percent for the week so far as worries gather. The European currency traded 0.05 percent lower at 1.1706, having touched a low of 1.1688 on Thursday, its lowest since September 30. Investors’ attention will remain on series of economic data from the Eurozone economies and EZ trade Balance and consumer price index ahead of the U.S. retail sales, industrial production, capacity utilization, Michigan consumer sentiment index, and business inventories. Immediate resistance is located at 1.1734, a break above targets 1.1758 (10-DMA). On the downside, support is seen at 1.1684, a break below could drag it below 1.1660.
USD/JPY: The dollar slumped as risk sentiment weakened amid surging coronavirus cases and stalled progress toward U.S. stimulus. The U.S. Midwest is battling record surges in new cases as temperatures get colder, prompting authorities to set up a field hospital in the suburbs of Milwaukee, Wisconsin. Moreover, the selling pressure around the pair intensified after data showed weekly U.S. jobless claims rose by more than expected and hit a 2-month high last week, increasing concerns the pandemic is causing lasting damage to the labour market. The major was trading 0.2 percent down at 105.26, having hit a low of 105.03 on Wednesday, its lowest since October 2. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. retail sales, industrial production, capacity utilization, Michigan consumer sentiment index, and business inventories. Immediate resistance is located at 105.62, a break above targets 105.79. On the downside, support is seen at 105.02, a break below could take it near at 104.84.
GBP/USD: Sterling plunged, extending previous session losses on concerns about the obstacles keeping the European Union and Britain from reaching a Brexit trade deal. Meanwhile, London will enter a tighter COVID-19 lockdown from midnight on Friday as Prime Minister Boris Johnson seeks to tackle a swiftly accelerating second coronavirus wave. The major traded 0.1 percent lower at 1.2894, having hit a low of 1.2862 on Wednesday, it’s lowest since October 7. Investors’ attention will remain on the geopolitical developments, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2929, a break above could take it near 1.2953. On the downside, support is seen at 1.2844, a break below targets 1.2805. Against the euro, the pound was trading 0.1 percent down at 90.78 pence, having hit a high of 90.07 on Wednesday, it’s highest since September 8.
AUD/USD: The Australian dollar tumbled, hovering towards a near 3-week low and was set for its worst weekly performance since late September as traders wager the country’s central bank would ease monetary policy next month. On Thursday, the pair fell nearly 1 percent following a speech by Reserve Bank of Australia Governor Philip Lowe who signalled a further easing was imminent. The Aussie trades 0.3 percent down at 0.7075, having hit a low of 0.7056 on Thursday, it’s lowest since September 28. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.7123, a break above could take it near 0.7155 (21-DMA). On the downside, support is seen at 0.7043, a break below targets 0.7005.
NZD/USD: The New Zealand dollar declined, drifting closer to a near 1 week low hit in the previous session, as the country’s central bank is actively considering negative interest rates to support jobs and growth and to tame its currency. Although investor prefer staying on the sidelines ahead of a general election on Saturday where Prime Minister Jacinda Ardern is widely expected to win. Opinion polls have indicated Ardern’s centre-left Labour Party has a comfortable two-digit lead over the main opposition centre-right National Party. The Kiwi traded 0.05 percent lower at 0.6595, having touched a low of 0.6597 on Thursday, its lowest level since October 9. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6620 (21-DMA), a break above could take it near 0.6642 (5-DMA). On the downside, support is seen at 0.6570, a break below could drag it below 0.6552
Asian shares slumped amid growing fears that resurgence in coronavirus cases and a lack of additional U.S. fiscal stimulus would hobble the world economy.
MSCI’s broadest index of Asia-Pacific shares outside Japan declined 0.05 percent.
Tokyo's Nikkei declined 0.3 percent to 23,444.64 points, Australia's S&P/ASX 200 index eased 0.5 percent to 6,176.80 points. South Korea's KOSPI fell 0.7 percent to 2,343.77 points.
Shanghai composite index rose 0.1 percent to 3,335.26 points, while CSI 300 index traded 0.2 percent down at 4,788.84 points.
Hong Kong’s Hang Seng traded 1.01 percent higher at 24,410.86 points. Taiwan shares shed 0.6 percent to 12,750.37 points.
Crude oil prices declined, weighed down by concerns about the coronavirus and its impact on the world economy. International benchmark Brent crude was trading 0.9 percent down at $42.71 per barrel by 0520 GMT, having hit a high of $43.54 last week, its highest since September 18. U.S. West Texas Intermediate was trading 0.6 percent lower at $40.56 a barrel, after rising as high as $41.44 last week, its highest since September 18.
Gold prices eased and were poised to post its first weekly drop in three, as the dollar held firm while additional U.S. fiscal stimulus appeared unlikely before the presidential election. Spot gold was down 0.05 percent to $1,907.62 per ounce by 0523 GMT, having hit a low of $1822.43 on Wednesday, its lowest since October 8. U.S. gold futures were up 0.1 percent at $1,912.20.
The U.S. Treasury yields declined, with the benchmark 10-year note yield trading at 0.727 percent and the 30-year yield at 1.503 percent.