US election uncertainty and surging coronavirus cases is keeping pressure on equity, commodity and currency markets. The US on Thursday set a new daily virus record at 87,100 case, with global cases approaching 45.5mio. The risk-off sentiment has seen the S&P is set for its worst week since June, the Dow is set for its worst month since March and the VIX (volatility Index) set for its biggest weekly gain since June. Asian currencies are flat on average, while the CNY is up 0.4% vs US$. Trading currencies have strengthened with AUD & NZD up 0.1%, JPY, MXN & NOK are up 0.2%, while ZAR is up 0.6% vs US$. Key drivers remains the uncertainty of the US elections and Covid-19 cases/lockdowns. Intraday US Personal Income, Personal Consumption Expenditure will be watched closely after Thursday strong US GDP results.
Oil prices remain under pressure, but flat to start the day, but analysts expect further weakness on expectations of more covid-lockdown are being implemented. Oil prices are poised for a second month of declines, down over 17% in sept & Oct. C$ consolidates below 1.3340 after Thursday’s better-than-expected US data helped calm market fears about rising covid-19 infections. C$ remains vulnerable to further weakness with both TSX and oil prices to remain under pressure. Intraday Canadian GDP and US data will be watched closely. Support rises to 1.3285 with minor resistance at 1.3340, if breached look for 1.3420 (Sep 30Th)
Euro trades below 1.17, near 1-month lows on fears of further ECB easing in 2020. The ECB left rates unchanged but warned of a double-dip recession and set the stage for further easing in December. Markets ignored todays positive set of economic data results from the EU, Germany and Italy showing GDP & CPI all posting at expectations or better. Focus remains on the increasing EU shutdown related to coronavirus and uncertainty around the US elections. Support at 1.1610, with resistance lowering to 1.1760.
GBP drops on fears of nationwide lockdown as coronavirus cases continue to surge across the UK. Brexit talks are ongoing, still no news, but this is perceived as good news. Despite the potential of a national lockdown, a positive outcome in Brexit talks would likely give GBP a significant boost. Intraday US data, US election, Brexit and covid-19 Updates will all have potential impact on GBP. Support 1.2820 with resistance holding at 1.3080.