Thursday October 22nd, 2020

The US$ steadies above its 7-week lows amid US election meddling news and the need for US Stimulus clarity. A federal statement reporting meddling in the US elections and fading hopes of a US stimulus pre-elections have impacted the risk on sentiment. The US$ index bounced off its lows as uncertainty grows with less than two weeks to the elections. CNY rally stalled as the government set a weaker-than-expected official rate, with CNY down 0.4% vs US$. Asian and AUD currencies are down 0.2% on average, while NZD continues its rally up 0.2% vs US$. Trading currencies, NOK & ZAR are flat, while JPY down 0.1% and MXN down 0.15% vs US$. Intraday US Stimulus updates, US Jobless data and tonight’s US Presidential debate will all have an impact on the US$ direction today.

Oil prices recover slightly after Wednesdays 3% fall due to US rising inventories, lower fuel demand and rising Libyan oil exports. Oil found support with Chinese refiner’s buying oil for delivery in 2021 and on news that Norwegian oil unions break off wage negotiations. C$ weakened from Wednesdays 1.3077 highs as the US$ consolidates and oil prices remain under pressure. Short term direction remains tied to US stimulus/political news. Support 1.3120, with minor resistance at 1.3180, if breached look for 1.3220. 

Euro weakens amid uncertainty over US stimulus and reports of meddling in the US elections. Disappointing consumer confidence survey from Germany and French Business Climate in Manufacturing which also fell below expectations. Markets will focus on EU Consumer Confidence later in the morning. The ECB’s dovish expectations due to the pandemic lockdowns added pressure to the Euro’s strength. Focus remains on US Stimulus and US jobs data. Support at 1.1750, with resistance at 1.1900.

GBP remains volatile swinging over 200bps testing 6-week highs as renewed Brexit talks boosted the GBP. EU/UK will resume post Brexit talks today, but the pressure is on with less than 4-weeks to achieve an agreement. GBP eased off its highs its highs amid concerns of a US Dem win could impact a US/UK trade deal. BoE member Haldane reiterated that the central bank is studying negative interest rates. Brexit remains the main driver for GBP, but US stimulus updates and US jobs data will also have an impact to intraday direction. Support 1.2820 with resistance holding at 1.3080.