EUR/GBP’s upside attempts remain capped below 0.9100

October 27, 2020 02:09   FXStreet   Market News  

  • EUR/GBP steady above 0.9040 and capped below 0.9100.
  • The pound remains on the defensive despite upbeat Brexit news.
  • Downbeat German Busines Climate Index adds pressure on the EUR.

The euro has been moving back and forth against the pound, trading without a clear bias on Monday. The pair remains steady on the upper range of 0.9000, with upside attempts limited below 0.9100 and risk aversion pushing both currencies down against the USD.

Hopes of a Brexit deal ease GBP’s weakness

News reports about the extension of the Brexit negotiations has boosted hopes of a trade deal between the UK and the EU and offered support to the sterling earlier today. The pair lost ground during the London trading session to hit session lows at 0.9040.

According to newspaper headlines, EU representative Michael Barnier will stay in London until Wednesday in an attempt to seal a trade agreement with the UK to avoid an unfriendly exit from the Union.

On the macroeconomic front, the sharper than expected deterioration of the German Business Climate, with the IFO Index retreating in October for the first time since the start of the pandemic, has increased concerns about the economic impact of the coronavirus, adding negative pressure on the euro.

The common currency, however, has found support at 0.9040 and pared daily losses to return to 0.9080 area and remain practically unchanged on the day. From a wider point of view, the pair is consolidating gains after having appreciated nearly 1% late last week although it seems unable to breach the 0.9100 level.

Technical levels to watch

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US House Speaker Pelosi: Trump administration refusing to put testing plan in relief bill

October 27, 2020 02:09   FXStreet   Market News  

The US President Donald Trump’s administration is refusing to accept Democrats’ testing plan as part of the coronavirus relief bill, House Speaker Nancy Pelosi said on Monday, as reported by Reuters.

According to several news outlets, sides haven’t been able to make enough progress to reach an agreement and Pelosi is expected to talk to Treasury Secretary Steven Mnuchin around 1800 GMT.

Market reaction

Safe-haven flows continue to dominate financial markets on Monday. As of writing, the S&P 500 Index was down 2.5% on the day at 3,379 and the Dow Jones Industrial Average was losing nearly 3% at 27,493.

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Gold Price Analysis: XAU/USD pushed and pulled in jittery market conditions

October 27, 2020 01:56   FXStreet   Market News  

  • Gold prices crumble below counter-trendline resistance despite bullish fundamentals.
  • Global coronavirus spread, US elections and stimulus uncertainty all in the mix.

The price of gold has been testing the bearish commitments above the $1,900 psychological level following a brief spell below it, printing a low of $1,891.50.

US election and stimulus news is dictating the flows in and out of the precious metal and has kept it coiled in a tight range of prior sessions.  

However, despite the bullish fundamentals, the price has been chipping away at lower lows below trendline resistance.

Global stocks pressured on covid headlines

European stocks ended the day sharply lower and the negative sentiment has fed through to Wall Street setting the Dow for its worst day in more than seven weeks.

The major indexes are down Dow 2.7%, S&P 2.1%, Nasdaq 1.75%.

New infections have touched record levels in both Europe and the United States.

El Paso in Texas is asking citizens to stay at home for the next two weeks while, in Europe, Italy and Spain imposed new restrictions.

Stimulus doubts before election 

Meanwhile, chances of a fiscal stimulus before the presidential election faded again at the start of the week.

US Treasury Secretary Steve Mnuchin said there are still areas in House Speaker Nancy Pelosi’s plan that President Donald Trump cannot accept.

The combination of risks in the count down to the US elections has seen Wall Street’s fear gauge VIX hit a near seven-week high.

The growing uncertainty fuelled by the second wave of the coronavirus, it would be reasonable to expect gold to benefit.

Additionally, analysts at TD Securities argued that there is evidence that some investors are willing to look beyond the election and in favour of gold:

”Indeed, the renewed weakness in the USD and prospect of global reflation amid large scale fiscal stimulus post-election continued to support gold and saw COMEX positioning grow.”

”While these factors should see the yellow metal move higher after the election, the bear steepening in the yield curve in a Blue Wave scenario could serve as a hindrance to gold upside in the immediate aftermath.”

Gold levels

However, from a technical standpoint, there is an argument for a near-term liquidation.

The Chart of the Week: Gold under pressure below key counter trend-line

In the above analysis of yesterday, the lows achieved by bears on Monday were forecasted as part of a bearish analysis, which is illustrating the technical case for further downside: 

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Geopolitical: US sanctions Iranian ministry of petroleum, national oil company

October 27, 2020 01:45   Forexlive Latest News   Market News  

New sanctions on Iran by the US treasury

US treasury has issued fresh Iran related sanctions targeting state oil sector

  • US sanctions Iran ministry of petroleum, national oil company
  • Also sanctions national Iranian tanker company
  • US designates Iran minister of petroleum under sanctions
  • US sanctions Iran entities, officials under counterterror power

The squeeze on Iran continues from the Trump administration

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New UK cases rise by 20,890 vs. 19,790 the day before

October 27, 2020 01:40   Forexlive Latest News   Market News  

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S&P 500 top movers: Cruise liner and airline stocks suffer heavy losses

October 27, 2020 01:40   FXStreet   Market News  

  • S&P 500 Index is down more than 2% on Monday.
  • Major cruise liners’ stocks are losing between 9% and 12%.
  • American Electric Power Company Inc (AEP: NASDAQ) shares are up nearly 2%.

Wall Street’s main indexes opened deep in the negative territory on Monday and continue to push lower in the second half of the session. As of writing, the S&P 500 Index was down 2.7% on a daily basis at 3,372. 

S&P 500 top movers

The sharp increase witnessed in confirmed cases of coronavirus globally weighs on market sentiment and the stocks of major cruise liners and airlines.

As of writing, Royal Caribbean Cruises Ltd (RCL: NYSE) was the biggest daily percentage decliner of the day with its shares losing 12.4% at $56.40. Moreover, the Norwegian Cruise Line Holdings Ltd (NCLH: NYSE), Carnival Corp (CCL: NYSE), Alaska Air Group Inc (ALK: NYSE) and United Airlines Holdings Inc (UAL: NASDAQ) shares are down between 10.3% and 8.65%.

On the other hand, American Electric Power Company Inc (AEP: NASDAQ) is the top performer of the day after the company announced that it signed a letter of intent with BQ Energy Development to purchase 100% offtake of Columbus Solar Park. The company further noted that it expects the solar energy facility to be operational by December 2022. Boosted by this announcement, AEP is up 1.6% on the day at 93.35.

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GBP/USD attempting to pick up from session lows below 1.3000

October 27, 2020 01:29   FXStreet   Market News  

  • GBP/USD found support at 1.2995 to return to levels beyond 1.3000.
  • Risk aversion weighing on the GBP despite the upbeat Brexit news.
  • GBP/USD remains positive while above 1.2990 – UOB.

The sterling is attempting to trim losses during the North American session on Monday after having retreated to session lows at 1.2995 following a three-day decline from last week’s top at 1.3175. The pair has regained the 1.3000 level although upside moves remain limited.

Pound dives amid broad-based US dollar strength

Cable has resumed its downtrend this week, with the US dollar appreciating across the board with the investors seeking shelter in safe-haven assets in a risk-off session. The increase of COVID-19 infections, with the US and France reaching record levels of contagions and Spain announcing a new state of emergency have crushed market mood.

In Europe, the positive news from the Brexit negotiations, which have been extended until next Wednesday has failed to ease market concerns. EU representative, Michael Barnier will stay in London for intensive talks this week, which has boosted hopes of a late-minute deal to avoid a “hard Brexit”.

GBP/USD remains positive while above 1.2990 – UOB

On the technical level, the FX analysis team at UOB remains positive on the GBP while above 1.2990: “Upward momentum is beginning to ease but only a break of 1.2990 (no change in ‘strong support’ level) would indicate that the current upside risk has dissipated. Meanwhile, in order to rejuvenate the current flagging momentum, GBP has to move and stay above 1.3120 within these 1 to 2 days or the odds for further GBP strength would diminish quickly.”

Technical levels to watch

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Germany’s Merkel planning “lockdown light” to tackle coronavirus – Bild

October 27, 2020 01:29   FXStreet   Market News  

German Chancellor Angela Merkel is planning to introduce new coronavirus-related restrictions measures called “lockdown light,” Reuters reported on Monday, citing German newspaper Bild.

According to the report, Merkel wants to keep schools and kindergartens open in regions that don’t have very high infection numbers and will focus on the closure of bars, restaurants and cancellation of events. New measures are expected to be discussed on Wednesday.

Market reaction

The EUR/USD pair showed no immediate reaction to this headline and was last seen losing 0.32% on a daily basis at 1.1822.

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Biden will push for immediate $2 trillion stimulus package along with tax increases

October 27, 2020 01:12   Forexlive Latest News   Market News  

From Fox Business’ Charlie Gasparino

Now this is a bit dubious coming from Fox Business but Charlie Gasparino is a great reporter, so it’s almost certainly true.

He says that aides to Biden say if elected he will push for a $2 trillion stimulus package immediately along with tax increases and infrastructure spending. Obvious, he will need to control Congress to get that through.

I don’t think the market will care about a tax on incomes above $400K but a corporate tax hike immediately would be a different story.

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EUR/USD consolidates daily losses above 1.1800

October 27, 2020 01:09   FXStreet   Market News  

  • EUR/USD remains on track to close in the red on Monday.
  • USD capitalizes on safe-haven flows at the start of the week.
  • The surging number of coronavirus cases in Europe weighs on sentiment.

After posting its highest weekly close in nearly two months at 1.1860 last Friday, the EUR/USD pair reversed its course on Monday as markets turned risk-averse. As of writing, the pair, which touched a daily low of 1.1803, was down 0.35% on a daily basis at 1.1818.

The surging number of coronavirus cases in Europe keeps the shared currency under bearish pressure at the start of the week. Spain declared a state of emergency, France reported more than 50,000 new infections in a single day on Sunday and Germany will reportedly introduce new restriction measures later in the week. Reflecting the risk-off environment, Germany’s DAX 30 and the Euro Stoxx 50 indexes both lost more than 2% on Monday.

DXY climbs above 93.00 on Monday

On the other hand, the greenback is outperforming its rivals boosted by safe-haven flows. The US Dollar Index is currently gaining 0.31% on the day at 93.03 and the S&P 500 is down 2.4%.

Earlier in the day, the data from the US showed that New Home Sales in September declined by 3.5% and the Chicago Fed National Activity Index fell to 0.27 and missed the market expectation of 0.39. 

On Tuesday, Durable Goods Orders, Richmond Fed Manufacturing Index and the Conference Board’s Consumer Confidence Index will be featured in the US economic docket. For the euro, the European Central Bank’s (ECB) monetary policy meeting on Thursday will be the next significant catalyst. Meanwhile, investors will keep a close eye on fresh developments surrounding the coronavirus outbreak in the continent.

Technical levels to consider

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ECB: Risks around more easing are rising – Wells Fargo

October 27, 2020 00:56   FXStreet   Market News  

The Governing Council of the European Central Bank will meet on Thursday to discuss monetary policy. Analysts at Wells Fargo expect no changes this week and they see that risks around more easing are rising. 

Key Quotes: 

“For the past few weeks, confirmed COVID cases have increased significantly, leading to new localized lockdown restrictions. With new lockdown protocol in place across some of the major European countries, the likelihood of renewed pressure on the Eurozone economy is rising.”

“With downside risks to the economy building, we think the ECB will begin to take a more dovish stance on the economy as well as monetary policy. While we are not explicitly forecasting interest rate cuts or an increase to the ECB’s quantitative easing program at this time, we think if confirmed COVID cases continue to rise and economic data deteriorate ECB policymakers would ultimately pursue easier monetary policy. In our view, an increase to its QE program would be more likely than interest rate cuts as rates are already negative.” 

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Tropical storm Zeta leads to US offshore production shutdowns

October 27, 2020 00:49   Forexlive Latest News   Market News  

Another storm heads for the northern gulf

Another storm heads for the northern gulf

The volume of hurricanes this storm season is blowing past records. We’re probably beyond the seasonal window for a major storm as waters cool but Zeta is going to cause problems in the gulf. It will approach the US on Wednesday evening “at or near hurricane strength,” according to the NHC.

The storm has already led to many offshore production shutdowns in what’s been a highly-disrupted year.

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