Dollar lower, equities higher on upbeat Trump prognosis
Trump’s medical team say he could be released as early as today after successful treatment of Covid-19. Coupled with optimism of a US fiscal stimulus agreement, leading to risk-on mood in the markets -- a lower US dollar and higher equity prices. A second wave of Covid-19 cases has hit central Europe. US Treasury yields jumped over 0.70% for the first time in a month. Oil and gold prices are higher.
US Service PMI (Sep)
US Bureau of Job Openings and Labor Turnover Survey (JOLTS) (Aug)
US Trade Balance (Aug)
Reserve Bank of Australia interest rate decision
US Fed Open Market Committee releases September 15-16 minutes
US Vice Presidential debate in Salt Lake City
China Composite and service PMIs (Sep)
Initial Jobless Claims
October 5, 2020
EUR/USD 1.1787 GBP/USD 1.2975 USD/CAD 1.3266 AUD/USD 0.7186 USD/JPY 105.55 USD/CNH 6.7910 USD/ILS 3.4099 USD/MXN 21.3996 USD/CHF 0.9150 USD/INR 73.2937
The dollar index is lower by nearly 0.40% with the risk-on mood in the markets. Optimism was fueled by a potential early release from the hospital of President Trump and by comments over the weekend by Nancy Pelosi that Trump’s positive coronavirus test could change the dynamic and lead to a break in the stalemate over the fiscal stimulus package. US equity markets are opening higher and volatility is down. Traders await confirmation of Trump’s early release and for a slew of economic data this week.GBP
The UK pound is holding steady ahead of two weeks of intense Brexit negotiations. The key remaining issues include fishing rights and state aid. Early hopes for constructive talks between PM Boris Johnson and EC President Ursula von der Leyen were dashed to some extent, as she has gone into isolation after contact with a person who tested positive for Covid-19.EUR
A surge in central Europe’s coronavirus cases increases the possibility of more strict lockdowns in Europe, which has become a headwind for further euro strength and demand by investors. However, this morning’s risk-on mood in the markets did manage to pull the euro nearly 0.60% higher versus the dollar from Friday’s close. Germany’s PMI of 50.6 exceeded expectations of 49.1 and remains above the key 50 level, indicating expansion, not contraction. Currency options traders were big buyers of euro calls today.CAD
The Canadian dollar edged higher and to its best levels in two weeks on the back of a broadly weaker US dollar, and higher oil, gold and other commodity prices.ASIA/PACIFIC
The Japanese yen weakened in today’s risk-on market, but remains within the tight 104.90-105.70 trading range in place for the last two weeks.
The USD/CNY dropped below 6.80 for the first time in two weeks, as the yuan strengthened in-line with broad dollar weakness. Traders await China’s PMI data to be released on Wednesday.
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