Archives of “October 2020” month

rss

Dollar extends gains as risk-off mood deepens in European morning trade

  
  Analysis

The yen is also gaining some modest ground on the session as such

AUD/USD is now down by over 1% on the day, falling to a low of 0.7077 as we see bids go into the dollar and yen amid the risk-off mood in the market.

AUD/USD H1 15-10
The DAX is now extending losses to 3%, with S&P 500 futures also seen down ~1% and Nasdaq futures down ~1.6%. Elsewhere, 10-year Treasury yields have now fallen by 3 bps to 0.695% at the lows for the day as well.
For AUD/USD, price action is breaking through key support around 0.7094-03 and that opens the door to a slippery slope towards the 0.7000 handle potentially next.
GBP/USD H1 15-10

As for GBP/USD, price action is now running into support from the 200-hour MA (blue line) and 50.0 retracement level of the jump higher yesterday.
Break below the former and the near-term bias switches back to being more bearish, and that could keep sellers poised to try and chase a further push towards 1.2900 again.
Another key pair to watch in the currencies space is AUD/JPY, often regarded as one of the key risk barometers in the market.
As noted earlier, the pair is extending a drop below its 100-day moving average @ 75.45 and is now down by over 1% to 74.45 with little in the way of a drop towards 74.00. That is sort of helping to keep risk pressured to the downside as well on the session.

What’s really driving the risk rout in the market today?

  
  Analysis
There were hints of a softer risk tilt going into European morning trade today, but it has turned into a bout of heavy selling over the past two hours as we see major indices in Europe slump by nearly 3% alongside a selloff in US futures as well.
It is pretty much the traditional risk-off play with flows moving into bonds, as we see 10-year Treasury yields fall by 3 bps to 0.695% to a two-week low and 10-year bund yields falling by more than 5 bps to -0.627% – its biggest drop in more than a month.
A couple of factors that market participants are pointing to are:
  1. US stimulus talks encountering another setback
  2. Coronavirus situation worsening in Europe, UK and some other parts of the world
  3. Recent news of vaccine and treatment trials stalling
  4. US election uncertainty still looming

(more…)

Eurostoxx futures -0.8% in early European trading

  
Analysis, Global Indices

Softer tones in early trades today

  • German DAX futures -0.8%
  • UK FTSE futures -0.6%
  • Spanish IBEX futures -0.7%
European stocks ended the day more mixed yesterday but with US equities and futures marked lower, it is pointing to some softness as we look to start the session. S&P 500 futures are down ~0.2% while Nasdaq futures are down ~0.5% currently.
Just be mindful of the more defensive risk tone as we get things underway, as that may lend some light bids into the likes of the yen and dollar if the flows gain more traction.

Nikkei 225 closes lower by 0.51% at 23,507.23

  
Analysis, Global Indices

Asian equities lower following Wall Street yesterday

Nikkei 15-10
The risk mood is more on the defensive to start the day, with Asian stocks also slumping amid more US stimulus setback that weighed on US equities yesterday.
The Hang Seng is down 1.3% while the Shgnahi Composite is near flat levels, keeping more subdued throughout the session. Elsewhere, US futures are also keeping lower and that is setting up a softer mood ahead of European trading today.
In the currencies space, things are little changed for now but just be mindful of how the risk mood plays out as that could see flows in/out of the dollar in the session ahead.
EUR/USD is keeping within a 17 pips range so far, little changed at 1.1752 currently.

Second round of stimulus will provide limited support to growth, highlights credit-negative fiscal constraints -Moody’s

  
Analysis, Economy

On 12 October, India (Baa3 negative) unveiled its second round of fiscal stimulus, amounting
to INR467 billion ($6.4 billion), or about 0.2% of our real GDP forecast for fiscal 2020,
ending March 2021. Notwithstanding the fiscal prudence of the measures, the small scale of
the stimulus highlights limited budgetary firepower to support the economy during a very
sharp contraction, a credit negative.
The new stimulus, which includes cash payments to government employees and interestfree loans to states, aims to boost consumer spending during India’s festive season, and to
increase capital expenditure. The measures will involve additional direct official spending of
around INR410 billion, but will not require fresh funding given that the government lifted its
borrowing limit earlier in 2020 to allow for coronavirus-related expenditure.
Even when combined with the government’s fiscal stimulus earlier in 2020, the size of the
measures remains modest. In total, the two rounds of stimulus bring the government’s direct
spending on coronavirus-related fiscal support to around 1.2% of GDP. This compares with an
average of around 2.5% of GDP for Baa-rated peers as of mid-June. (more…)

US President challenger Biden campaign has nearly half a billion $ in campaign cash

  
Analysis, Politics

The Biden campaign have announced they raised more than $380m in September, and they now have more than $430m in campaign cash on hand.

$430m is chunky amount with less than 3 weeks to go. Polls continue to indicate a Biden victory, the cash buffer gives scope for a saturation spend should the polls narrow.
Biden may be on track for a “Morning in America” Reagan-style victory a-la 1980.

The Biden campaign have announced they raised more than $380m in September, and they now have more than $430m in campaign cash on hand.

Go to top