Forex new for North American trading on October 19, 2020.
- Pelosi and Mnuchin spoke on Monday and 'continued to narrow their differences'
- NASDAQ index lower for the 5th straight day. The Dow and S&P down for the 4th day in 5 days
- Democratic conference call said sides still apart on 'values'
- Pelosi to caucus: Negotiators are still trying to reach a relief deal
- WTI crude oil futures settle at $40.83 for the November contract
- Fed's Bostic: Widespread, permanent job losses pose risk to economy
- Another Black Monday anniversary comes and goes
- AUD/USD RBA dovishness priced in, go long after 0.7000 re-test - SocGen
- Fed's Clarida repeats that more monetary and fiscal aid likely needed
- White House spokeswoman says cautiously optimistic on stimulus deal
- Major European indices end with mixed results to start the trading week
- Frost and Barnier agreed to intensification of talks -- Gove
- UK's Gove: EU talks would be meaningless
- Barnier says confirmed that EU remains available to intensify negotiations
- BOC Q3 business outlook on future sales +39 vs -35 prior
- US October NAHB housing market index 85 vs 83 expected
- Can markets look through the fog of the next few months?
- US daily air passengers hit 1m for the 1st time yesterday since pandemic
- Canada August wholesale trade sales +0.3% vs +0.1% expected
- Powell: Fed has not made a decision to issue a digital currency
- The GBP is the strongest and the USD is the weakest as NA traders enter for the day
The USD fell on the day but pared declines vs most of the major currencies by the close on concerns regarding House Majority Leader Pelosi's deadline for a deal set for tomorrow. Pelosi and Mnuchin met near the end of day and "continued to narrow differences". She expressed hopes that by the end of Tuesday there will be clarity on whether stimulus is possible pre-election. However, there seemed still to be major differences between the two approaches to the what needs to be done.
The concerns about a deal, sent the AUD to new session lows and in the process overtook the USD and JPY as the weakest of the major currencies. The CHF was the beneficiary today and is ending the session as the strongest of the major currencies.
IN the UK the GBP had an up and down day as the Brexit negotiations had conflicting signals on the progress from the respective parties. Continued uncertainty should continue to cause the GBP pairs to chop up and down on the headlines and what is flavor of the day (or hour at times).
The uncertainty in the US (and the UK/EU too) sent stocks in the US lower after a higher open. The final numbers had the S&P and Nasdaq indices each down over -1.6%. The Dow fell by over -400 points or -1.44%. In Europe, the major indices were mixed on the day.
The precious metals closed higher on the day, but off their intraday peaks. Both gold and silver followed the fortunes of the dollars moves. The afternoon dollar rise saw some of the earlier gains eroded in the precious metals by the close.
- Spot gold is trading up $4.46 or 0.23% at $1903.75.
- Spot silver is trading up $0.21 or 0.89% at $24.37
In the oil market, WTI crude oil futures for November delivery fell $0.20 or -0.49% to $40.71. The December contract was down $0.20 or -0.49% at $40.92.
In the US debt market, yields moved higher and didn't quite follow the stock market story (i.e. there was not a flight into the safety of US debt). The 10 year yield rose by 2.5 basis points to 0.770%. The 30 year bond rose by 3.2 basis points to 1.561%.
Some technical levels into the new trading day for the major currencies:
- USDJPY. The USDJPY traded in a very narrow 20 pip trading range and is closing between the 200 hour moving average above at 105.52 and the 100 hour moving average below 105.334. Look for a break and run as non-trend transitions to trend.
- EURUSD: Although the EURUSD is ending off the highs for the day, the pair is still higher and in the process broke above its 200 hour moving average and 50% midpoint of the range since October 8 at 1.17592 (both technical levels are at the same price). Stay above that level would keep the buyers more in control in the new trading day. Move below and we should see some additional probing to the downside. The 100 hour moving averages at 1.1732.
- GBPUSD: The GBPUSD spent most of the New York session above the 200 and 100 hour MAs at 1.2966 and 1.2949 until dollar selling turn to dollar buying in the New York afternoon session. Both of those moving averages were broken. The pair near the close trades just under its 100 hour moving average at 1.29491. Stay below each would tilt the bias more to the downside. Move above and the bias shifts back higher from a technical perspective.
- USDCHF. The USDCHF fell toward the low prices from October at 0.9088 and 0.90849. The low price reached 0.90899, before finding a modest bid into the close. The current price is trading at 0.9100. If the price can trade more comfortably above that natural level and extend above 0.9112 (the swing low from October 13), there should be additional buying momentum. Failure to do that and a break below the October low would target 0.9074 (swing low from September 18) and then September 14 and 15 lows at 0.9054 and 0.90508 respectively.
