Market News


TIME
2020-10-28 16:40 GMT
Pair

Summary
Gold is falling sharply and is down almost two percent, even after trimming losses. XAU/USD tumbled to $1,868/oz reaching the lowest level since late-
Content
  • Risk aversion boosts US dollar and hits gold that falls below the 20-day moving average. 
  • Wall Street tumbles amid concerns on a resurgence in coronavirus cases.

Gold is falling sharply and is down almost two percent, even after trimming losses. XAU/USD tumbled to $1,868/oz reaching the lowest level since late-September. As of writing, it trades at $1,880 off lows as risk aversion eases across financial markets.

The Dow Jones drops 2.45% and the Nasdaq slides 2.70%. In Europe, the DAX tumbled 4.10% and the CACA 40 3.45%. The increase in coronavirus cases prompts officials across Europe to consider lockdowns measures that should weigh on the economy.

Risk aversion did not trigger the demand for gold. Not even lower US yields offered support to the metal that suffered like most assets.

From a technical perspective, the recent decline leaves XAU/USD vulnerable to more losses. A consolidation below $1,870 would expose the next support seen at the September of $1,850. On the upside, a recovery above $1,900 would alleviate the bearish pressure. Only a rally that surpass $1,930 (downtrend line) would change the bias to bullish.

Technical levels

 

 

 


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-10-28 16:16 GMT
Pair
EUR/USD
Summary
The German government and states have agreed on a coronavirus aid package to compensate the firms that are forced to close in November, Reuters report
Content

The German government and states have agreed on a coronavirus aid package to compensate the firms that are forced to close in November, Reuters reported, citing sources familiar with the matter.

The aid package will reportedly be worth up to €10 billion and the government will pay the affected small firms 75% and big firms 70% of their lost sales in November.

Market reaction

The EUR/USD pair edged slightly higher after this headline and was last seen losing 0.32% on a daily basis at 1.1755. 


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 1.1779 S2: 1.1763 S3: 1.1733 R1: 1.1825 R2: 1.1855 R3: 1.1871
Trend Index
Recommendation : Bullish Strength : 1
OBOS Index
OBOS Index : Neutral

TIME
2020-10-28 16:07 GMT
Pair
GBP/USD
Summary
There were 24,701 new confirmed coronavirus infections in the UK as of Wednesday morning, the UK government data showed, per Reuters. This reading fol
Content

There were 24,701 new confirmed coronavirus infections in the UK as of Wednesday morning, the UK government data showed, per Reuters. This reading followed Tuesday's increase of 22,885.

Further details of the report revealed that there were 310 fatalities within 28 days of testing positive, compared to 367 on Tuesday.

Market reaction

These figures don't seem to be having a noticeable impact on the British pound's performance against its rivals. As of writing, the GBP/USD pair was down 0.38% on a daily basis at 1.2995.


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 1.3004 S2: 1.2963 S3: 1.2926 R1: 1.3083 R2: 1.3121 R3: 1.3162
Trend Index
Recommendation : Bullish Strength : 3
OBOS Index
OBOS Index : Neutral

TIME
2020-10-28 15:59 GMT
Pair
USD/CAD
Summary
The Bank of Canada (BoC) has decided to leave its policy rate unchanged at 0.25% as expected. Regarding the loonie, the one-two punch of COVID-19 and
Content

The Bank of Canada (BoC) has decided to leave its policy rate unchanged at 0.25% as expected. Regarding the loonie, the one-two punch of COVID-19 and US election uncertainty has produced a fresh pullback in risk appetite, dragging CAD with it. A messy US election could inspire a push towards 1.35 in the very short-run, where analysts at TD Securities like fading USD/CAD rallies.  

Key quotes

“The BoC held the overnight rate at the effective lower bound of 0.25% in October as widely expected, while forward guidance continues to pledge that the Bank will remain at the ELB until slack is fully absorbed (which they expect to occur in 2023).”

“The BoC announced they should shift their QE program to focus more on longer-term bonds while at the same time gradually reducing minimum cash purchases of GoCs from $5bn per week to $4bn per week. The program is expected to provide at least as much stimulus as it did previously, which implies steady or larger total duration, echoing the Fed's Operation Twist.”

“The forward guidance on the overnight rate was unchanged, with the Bank pledging to remain at the overnight rate until slack is fully absorbed (which they expect in 2023). MPR forecasts revealed a 2.1pp upgrade to GDP in 2020 (with a 0.9pp downgrade in 2021) and a 3pp hit to potential output by 2022.”

“For CAD, the BoC has to take a backseat to risk sentiment. The backdrop remains on souring sentiment, reflecting the global COVID-19 spike and the tail-risks of the US election. We think most of this setup underscores a positioning adjustment that will offer fresh opportunities to resell the USD. Still, CAD's a high-beta currency and it has been trading at fairly wide gaps to our dashboard. 

“Our global risk and growth two-factor framework put USD/CAD at 1.35. The one-two punch of US elections and COVID-19 could help inspire a retest of that level in the very short-run. However, we continue to like fading USD/CAD rallies towards 1.35 and think the next big move.”

 


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 1.3147 S2: 1.3110 S3: 1.3077 R1: 1.3217 R2: 1.3250 R3: 1.3287
Trend Index
Recommendation : StronglyBearish Strength : -5
OBOS Index
OBOS Index : Neutral

TIME
2020-10-28 15:47 GMT
Pair

Summary
Following the Bank of Canada's decision to leave its policy rate unchanged at 0.25% as expected, Governor Tiff Macklem and Senior Deputy Governor Caro
Content

Following the Bank of Canada's decision to leave its policy rate unchanged at 0.25% as expected, Governor Tiff Macklem and Senior Deputy Governor Carolyn A. Wilkins are delivering their remarks on the policy outlook in a press conference.

Key quotes

"Negative interest rates would be disruptive at the current time."

"The bar to have negative rates would be very high."

"Negative rates are in the toolbox but we are not currently discussing them."

About Tiff Macklem via bankofcanada.ca

"Tiff Macklem was appointed Governor of the Bank of Canada, effective June 3, 2020, for a term of seven years. During the Global Financial Crisis, Mr. Macklem was Associate Deputy Minister at the Department of Finance, and served as Canada's representative at the G7, G20 and Financial Stability Board. In July 2010, Mr. Macklem returned to the Bank and was appointed Senior Deputy Governor."


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-10-28 15:36 GMT
Pair
EUR/USD
Summary
Optimism that a fresh US fiscal stimulus package could be announced ahead of the presidential election has faded and the market outlook has been overt
Content

Optimism that a fresh US fiscal stimulus package could be announced ahead of the presidential election has faded and the market outlook has been overtaken by rising fears connected with the second wave of COVID-19. Insofar as Europe is in the grip of a second wave of the pandemic and fears about deflation in the region are widening, the EUR’s shine appears to be dimming. Economists at Rabobank forecast the EUR/USD pair at 1.17 on a one-month view. 

Key quotes

“Press reports on Wednesday have hinted at the possibility of another national lockdown for France from Thursday night. In Germany there are reports that Chancellor Merkel could close all restaurants and bars and some other venues from November 4. In Rome protests have erupted in dissatisfaction about the latest restrictions.”

“Friday is set to bring news of a sharp rebound in the level of economic activity in the Eurozone in Q3: the Bloomberg market median for the advance GDP growth release stands at 9.6% QoQ. Additionally, the data will be accompanied by the latest round of Eurozone CPI inflation data which can be expected to provide further evidence that deflation is persisting.”

“Having been buoyed by the creation of long EUR positions in the spring and summer, we see the EUR as now vulnerable to further selling pressure against both the USD and the JPY. While a steady policy outcome from the ECB tomorrow would likely lend the EUR support, given the worrying economic backdrop in the EUR, we would expect any rebound in EUR/USD and EUR/JPY to be short-lived.”

“While the huge liquidity facilities put in place by the Federal Reserve this year suggest that the market is unlikely to see anything like the disruption experienced in March in the foreseeable future, we do expect reduced risk appetite to translate into a covering of short USD positions. We look for EUR/USD at 1.17 on a one-month view and see risk of a dip to EUR/USD 1.16 in three-months.”  

 


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 1.1779 S2: 1.1763 S3: 1.1733 R1: 1.1825 R2: 1.1855 R3: 1.1871
Trend Index
Recommendation : Bullish Strength : 1
OBOS Index
OBOS Index : Neutral

TIME
2020-10-28 15:29 GMT
Pair

Summary
Following the Bank of Canada's decision to leave its policy rate unchanged at 0.25% as expected, Governor Tiff Macklem and Senior Deputy Governor Caro
Content

Following the Bank of Canada's decision to leave its policy rate unchanged at 0.25% as expected, Governor Tiff Macklem and Senior Deputy Governor Carolyn A. Wilkins are delivering their remarks on the policy outlook in a press conference.

Key quotes

"There was a robust discussion about forward guidance in the governing council."

"QE bond purchases will shift toward 3, 5, 10, 15 and some 30-year bonds."

"We're going to get through this but it's going to be a long slog."

"Message to Canadians is that interest rates are going to be low for a long time."

About Tiff Macklem via bankofcanada.ca

"Tiff Macklem was appointed Governor of the Bank of Canada, effective June 3, 2020, for a term of seven years. During the Global Financial Crisis, Mr. Macklem was Associate Deputy Minister at the Department of Finance, and served as Canada's representative at the G7, G20 and Financial Stability Board. In July 2010, Mr. Macklem returned to the Bank and was appointed Senior Deputy Governor."


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-10-28 15:28 GMT
Pair
USD/JPY
Summary
The Bank of Japan (BoJ) is set to hold monetary policy steady and downgrade economic forecasts. In addition, the central bank could throw hints on fur
Content

The Bank of Japan (BoJ) is set to hold monetary policy steady and downgrade economic forecasts. In addition, the central bank could throw hints on further easing in December. USD/JPY will continue with its downtrend after the BoJ decision, according to FXStreet’s Dhwani Mehta.

See – Bank of Japan Preview: Five major banks expectations

Key quotes

“The BoJ board members are expected to keep rates unchanged at -10bps while maintaining a 10yr JGB yield target at 0.00%. However, the bank is seen extending the deadline for two virus-linked funding programs and enlarged asset purchases at the meeting.”

“Alongside the policy announcement, the central bank is seen downgrading this fiscal year's economic and inflation outlooks in its quarterly assessment report. Although the outlook reviews are already priced-in by the markets, any hints on additional monetary policy easing in December, by way of fresh quantitative easing (QE), could have a significant impact on the yen.”

“The immediate support of the three-month-old descending trendline, seen at 103.87, could be put at risk on any policy efforts by BoJ to boost the economic rebound.”

“If the announcement turns out to be a non-event, investors could use it as an excuse to embark upon a corrective pullback towards the 105.00 level, above which the next resistance awaits at the 21-daily moving average (DMA) hurdle of 105.27.”

 


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 104.24 S2: 104.06 S3: 103.74 R1: 104.74 R2: 105.07 R3: 105.24
Trend Index
Recommendation : StronglyBearish Strength : -5
OBOS Index
OBOS Index : Oversold

TIME
2020-10-28 15:15 GMT
Pair

Summary
Following the Bank of Canada's decision to leave its policy rate unchanged at 0.25% as expected, Governor Tiff Macklem and Senior Deputy Governor Caro
Content

Following the Bank of Canada's decision to leave its policy rate unchanged at 0.25% as expected, Governor Tiff Macklem and Senior Deputy Governor Carolyn A. Wilkins are delivering their remarks on the policy outlook in a press conference.

Key quotes

"We are providing exceptional forward guidance combined with a full economic projection to provide as much clarity as we can to Canadians."

"The QE adjustment is about maximising the effectiveness of the program."

"There is scope to do more with the QE program and if we need to do more we will do more."

About Tiff Macklem via bankofcanada.ca

"Tiff Macklem was appointed Governor of the Bank of Canada, effective June 3, 2020, for a term of seven years. During the Global Financial Crisis, Mr. Macklem was Associate Deputy Minister at the Department of Finance, and served as Canada's representative at the G7, G20 and Financial Stability Board. In July 2010, Mr. Macklem returned to the Bank and was appointed Senior Deputy Governor."


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-10-28 15:13 GMT
Pair
EUR/USD
Summary
The German government and states have agreed to a partial lockdown in the country with bars and restaurants closing from November 2nd, Reuters reporte
Content

The German government and states have agreed to a partial lockdown in the country with bars and restaurants closing from November 2nd, Reuters reported on Wednesday, citing sources familiar with the matter.

According to the report, the partial lockdown will allow shops to remain open under the condition of one person per 10 square meters to respect social distancing. Additionally, the partial lockdown of bars and restaurants will reportedly remain in place until the end of November.

Market reaction

The EUR/USD pair showed no immediate reaction to this headline and was last seen gaining 0.47% on a daily basis at 1.1740.


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 1.1779 S2: 1.1763 S3: 1.1733 R1: 1.1825 R2: 1.1855 R3: 1.1871
Trend Index
Recommendation : Bullish Strength : 1
OBOS Index
OBOS Index : Neutral

TIME
2020-10-28 15:07 GMT
Pair

Summary
Following the Bank of Canada's decision to leave its policy rate unchanged at 0.25% as expected, Governor Tiff Macklem and Senior Deputy Governor Caro
Content

Following the Bank of Canada's decision to leave its policy rate unchanged at 0.25% as expected, Governor Tiff Macklem and Senior Deputy Governor Carolyn A. Wilkins are delivering their remarks on the policy outlook in a press conference.

Key quotes

"It will take quite some time for the economy to fully recover from the COVID-19 pandemic."

"Bank of Canada will keep providing monetary stimulus to support the economy through the recovery."

"Canadian dollar has been a bit stronger than we assumed in July, despite continued low oil prices."

"Some parts of the economy will simply be unable to completely reopen until a vaccine is widely available."

About Tiff Macklem via bankofcanada.ca

"Tiff Macklem was appointed Governor of the Bank of Canada, effective June 3, 2020, for a term of seven years. During the Global Financial Crisis, Mr. Macklem was Associate Deputy Minister at the Department of Finance, and served as Canada's representative at the G7, G20 and Financial Stability Board. In July 2010, Mr. Macklem returned to the Bank and was appointed Senior Deputy Governor."


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-10-28 15:05 GMT
Pair

Summary
Crude oil prices remain well on the defensive although they manage to grab some buying interest near the $37.00 mark per barrel on Wednesday. WTI focu
Content
  • Prices of the WTI remain on the defensive albeit off lows.
  • Demand concerns dragged prices to 3-week lows near $37.00.
  • EIA reported an unexpected 4.3 mb build during last week.

Crude oil prices remain well on the defensive although they manage to grab some buying interest near the $37.00 mark per barrel on Wednesday.

WTI focused on demand fears

Prices of the barrel of the WTI have been losing ground in past sessions in response to heightened concerns over the impact of the pandemic on the demand for crude oil as well as on prospects of global growth.

Also weighing down on the West Texas Intermediate (and the rest of the riskier assets), the chances that an extra stimulus package could be approved before the November elections in the US are now closer to zero.

In addition, the EIA reported a 4.3M barrel build during last week, with supplies at Cushing down by around 0.42M barrels and Gasoline inventories shrinking less than expected by nearly 0.9M barrels.

WTI significant levels

At the moment the barrel of WTI is losing 4.00% at $37.39 and a breach of $37.14 (monthly low Oct.28) would expose $36.66 (monthly low Oct.2) and then $36.15 (monthly low Sep.8). On the flip side, the next up barrier is located at $41.87 (monthly high Oct.20) seconded by $43.75 (monthly high Aug.26) and finally $48.64 (monthly high Mar.3).


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-10-28 15:04 GMT
Pair

Summary
Gold heavily depends on stimulus, and the more, the merrier. The optimal scenario is a clean Democratic sweep, followed by a Trump victory. A split be
Content

Gold heavily depends on stimulus, and the more, the merrier. The optimal scenario is a clean Democratic sweep, followed by a Trump victory. A split between President Trump and the Senate is the worst outcome, Yohay Elam, an Analyst at FXStreet, reports.

Key quotes

“President Donald Trump is trailing rival Joe Biden in national and state polls. According to FiveThirtyEight, he has an 88% chance of winning at the time of writing. Democrats have around 70% probability of winning the House and the Senate. In this ‘blue wave’ scenario – which is the likeliest according to the polls – Dems could approve a bill worth $2 trillion as they nearly agreed with Republicans, or even $3.4 trillion as they originally wanted to do back in May. For the yellow metal, the more the merrier. A break above the all-time highs cannot be ruled out in this scenario.”

“Many still remember 2016 and claim that polls are missing the ‘shy Trump voter’ and that he can still win the electoral college. While surveyors probably fixed some of their problems, there is still a chance that the president squeezes another victory. In that case, Republicans are also likely to cling onto the Senate. In this scenario, Trump may feel he has the mandate to impose his will on Republicans and a stimulus package is likely even during the ‘lame duck’ period. Gold bulls would likely cheer such a scenario, but any rally would be short-lived, as the total package will probably be smaller than a ‘blue’ one.”

“The chances for Biden to oust Trump are higher than for Dems to beat the GOP in the race for the Senate. If Republicans cling onto the upper chamber, they would probably limit any large package. Gold could suffer in response to partisan brinkmanship – especially if the relief deal falls short of the $1 trillion mark. A significant retreat toward pre-pandemic levels is an option as well. Negotiations could be protracted.” 

 


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-10-28 14:38 GMT
Pair

Summary
New economic policies conducted in the United States could reduce the dollar’s reserve currency role, leading to a depreciation of the dollar, rising
Content

New economic policies conducted in the United States could reduce the dollar’s reserve currency role, leading to a depreciation of the dollar, rising long-term interest rates and falling share prices, particularly for technology shares if dominant positions are challenged, according to analysts at Natixis.

Key quotes

“The dollar remains the dominant international reserve currency , and if this status disappeared, the United States would face a serious crisis. The reason is that the dollar's status enables the US to maintain continuous fiscal and external deficits and to finance them without difficulty at a very low interest rate. It should also be pointed out that the US’ attractiveness for non-resident investors concerns not only US Treasuries and bonds, but also equities. The dollar can therefore be said to be a reserve currency for all types of financial assets.”

“A decline of the dollar as an international reserve currency could be the result of economic policies in the US that would discourage foreign investors (in US bonds and equities): A fiscal and monetary policy that would exacerbate the shortfall in savings relative to investment (increase in welfare spending and unfunded public investment, keeping interest rates very low and thereby discouraging savings) and therefore speed up the increase in US external debt; A wage or competition policy that would reduce US companies' profitability and affect the attractiveness of the US equity market for non-residents.”

 


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-10-28 14:37 GMT
Pair

Summary
Following the Bank of Canada's decision to leave its policy rate unchanged at 0.25% as expected, Governor Tiff Macklem and Senior Deputy Governor Caro
Content

Following the Bank of Canada's decision to leave its policy rate unchanged at 0.25% as expected, Governor Tiff Macklem and Senior Deputy Governor Carolyn A. Wilkins will be delivering their remarks on the policy outlook in a press conference at 1500 GMT.

Related articles

Bank of Canada leaves policy rate unchanged at 0.25% as expected.

In its policy statement, the BoC noted that there is an ongoing and significant slack in the Canadian economy and added that the gap between the actual and potential output is not expected to close until 2023.

About Tiff Macklem via bankofcanada.ca

"Tiff Macklem was appointed Governor of the Bank of Canada, effective June 3, 2020, for a term of seven years. During the Global Financial Crisis, Mr. Macklem was Associate Deputy Minister at the Department of Finance, and served as Canada's representative at the G7, G20 and Financial Stability Board. In July 2010, Mr. Macklem returned to the Bank and was appointed Senior Deputy Governor."


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-10-28 14:33 GMT
Pair

Summary
Crude Oil Stocks Change in the US was +4.3 million barrels in the week ending October 23rd, the weekly report published by the US Energy Information A
Content

Crude Oil Stocks Change in the US was +4.3 million barrels in the week ending October 23rd, the weekly report published by the US Energy Information Administration (EIA) revealed on Wednesday. Analysts estimate was for an increase of 1.2 million barrels.

Market reaction

Crude oil prices pushed lower with the initial reaction to the EIA's weekly report and the barrel of West Texas Intermediate (WTI) was last seen losing 4.1% on the day at $37.33.

Additional takeaways

"US crude oil refinery inputs averaged 13.4 million barrels per day during the week ending October 23, 2020, which was 363,000 barrels per day more than the previous week’s average."

"US crude oil imports averaged 5.7 million barrels per day last week, increased by 0.5 million barrels per day from the previous week."

"Total products supplied over the last four-week period averaged 18.9 million barrels a day, down by 11.3% from the same period last year."


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-10-28 14:30 GMT
Pair

Summary
United States EIA Crude Oil Stocks Change came in at 4.32M, above expectations (1.23M) in October 23
Content

Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-10-28 14:30 GMT
Pair
GBP/USD
Summary
The GBP/USD pair rallied around 100 pips from the daily swing lows, albeit seemed struggling to find acceptance above the key 1.3000 psychological mar
Content
  • GBP/USD found some support ahead of the 1.2900 mark and witnessed a short-covering move.
  • A broad-based USD strength and Brexit uncertainties kept a lid on the pair’s attempted recovery.

The GBP/USD pair rallied around 100 pips from the daily swing lows, albeit seemed struggling to find acceptance above the key 1.3000 psychological mark.

The pair extended its recent pullback from the 1.3175 region and continued losing ground through the mid-European session on Wednesday. The steep decline marked the fourth day of a negative move and was exclusively sponsored by a broad-based US dollar strength.

Investors remain concerned that imposition of fresh lockdown measures to curb the second wave of COVID-19 infections could hinder the tepid global economic recovery. This, in turn, took its toll on the global risk sentiment and triggered a selloff in the equity markets.

The anti-risk flow provided a strong boost to the safe-haven greenback, which was seen as one of the key factors that continued exerting some pressure on the GBP/USD pair. The USD bulls seemed rather unaffected by the uncertainty about the outcome of the US election.

It is worth reporting that polls have been indicating a lead for the Democratic candidate Joe Biden over incumbent President Donald Trump. Investors, however, remain wary on the back of a narrow gap in key swing states and the possibility of the outcome being contested.

On the other hand, the British pound was undermined by persistent Brexit-related uncertainties amid the impasse on the matter of the future access of EU fishing fleets to UK waters. This, along with some technical selling below the 1.2990 level aggravated the intraday bearish pressure.

The GBP/USD pair, however, managed to find some support ahead of the 1.2900 mark and witnessed some aggressive short-covering move during the early North American session. The attempted bounce lacked any obvious fundamental catalyst and is more likely to remain limited.

Technical levels to watch

 


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 1.3004 S2: 1.2963 S3: 1.2926 R1: 1.3083 R2: 1.3121 R3: 1.3162
Trend Index
Recommendation : Bullish Strength : 3
OBOS Index
OBOS Index : Neutral

TIME
2020-10-28 14:16 GMT
Pair

Summary
The Bank of Japan (BoJ) is likely to stand pat on its monetary policy settings when it concludes its two-day review meeting on Thursday and as we get
Content

The Bank of Japan (BoJ) is likely to stand pat on its monetary policy settings when it concludes its two-day review meeting on Thursday and as we get closer to the release time, here are the expectations forecast by the economists and researchers of five major banks regarding the BoJ Monetary Policy Statement. Although the policy announcement may not be market-moving, investors will pay close attention to the Japanese central bank’s quarterly outlook report and future policy guidance.

Standard Chartered

“We expect the BoJ to keep the policy balance rate unchanged at -0.1% and the 10Y target yield at c.0%. We think there is limited room for the central bank to cut its base rate but expect it to continue to expand QE to pump in liquidity into the market. We expect the new government to continue with expansionary fiscal policy to support growth. We think the BoJ will ease monetary policy if fiscal policy requires further QE.”

ING

“Lots of Japanese activity releases will come as fresh inputs for the Bank of Japan policymakers deciding the policy on October 29, though none of these are likely to change the current policy stance.”

TDS

“The BoJ should be keeping its main policy tools unchanged and downgrade its inflation forecast. With another wave of COVID-19 cases surging across the world, the BoJ is likely to express a more cautious tone since its last meeting. The build in corporate profits prior to the pandemic is now eroding rather precipitously, which could prompt new avenues of BoJ support down the line.”

Deutsche Bank

“Our economists expect no policy stance change in light of the slow but steady economic recovery and stable exchange rate.”

Danske Bank

“We will likely see a cut in the BoJ's new forecasts for GDP and inflation. We do not expect any changes to the QQE with yield curve control policy, though.”


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-10-28 14:07 GMT
Pair
USD/JPY
Summary
The USD/JPY pair remained depressed through the early North American session, albeit has managed to rebound around 20-25 pips from five-week lows touc
Content
  • USD/JPY added to the overnight losses and witnessed some follow-through selling on Wednesday.
  • A selloff in the equity markets underpinned the safe-haven JPY and exerted some heavy pressure.
  • A strong pickup in the USD demand helped the pair to find some support ahead of the 104.00 mark.

The USD/JPY pair remained depressed through the early North American session, albeit has managed to rebound around 20-25 pips from five-week lows touched earlier this Wednesday.

The pair extended this week's retracement slide from levels just above the key 105.00 psychological mark and witnessed some heavy selling for the second consecutive session. A selloff in the global equity markets forced investors to take refuge in traditional safe-haven assets. This, in turn, boosted the Japanese yen and was seen as a key factor exerting pressure on the USD/JPY pair.

The global risk sentiment took a hit on the back of growing worries about the continuous surge in new coronavirus cases. The US political uncertainty and the lack of progress in the US stimulus talks further dampened the market mood. The global flight to safety was further reinforced by a fresh leg down in the US Treasury bond yields, which contributed to the USD/JPY pair's intraday fall.

However, concerns that renewed lockdown measures to curb the second wave of COVID-19 infections could derail the already fragile economic recovery provided a strong to the US dollar's status as the global reserve currency. A broad-based USD strength helped ease the bearish pressure, rather assisted the USD/JPY pair to find decent support ahead of the 104.00 mark, or September monthly swing lows.

That said, any meaningful recovery still seems elusive amid absent relevant market-moving economic releases. The focus now shifts to the latest monetary policy update by the Bank of Japan (BoJ), scheduled to be announced during the Asian session on Thursday. The BoJ decision, along with developments surrounding the coronavirus saga will now play a key role in influencing the near-term momentum for the USD/JPY pair.

Technical levels to watch

 


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 104.24 S2: 104.06 S3: 103.74 R1: 104.74 R2: 105.07 R3: 105.24
Trend Index
Recommendation : StronglyBearish Strength : -5
OBOS Index
OBOS Index : Oversold

TIME
2020-10-28 14:03 GMT
Pair
EUR/USD
Summary
The persistent bias towards the safe haven universe drags EUR/USD to the important area of contention near the 1.1700 level on Wednesday. EUR/USD look
Content
  • EUR/USD loses further ground and drops to the vicinity of 1.17.
  • Coronavirus concerns underpin the risk-off sentiment among traders.
  • Investors expect a dovish message from the ECB on Thursday.

The persistent bias towards the safe haven universe drags EUR/USD to the important area of contention near the 1.1700 level on Wednesday.

EUR/USD looks cautious ahead of the ECB event

A combination of cautious trade ahead of the ECB monetary policy meeting (on Thursday) and rising concerns over the advance of the pandemic in Europe is taking a toll on the single currency and the rest of its risk-associated peers on Wednesday.

The pick-up in the risk aversion comes in tandem with the implementation of tighter restriction measures across the Old Continent in order to slow down the spread of the coronavirus, which has reached unprecedented levels in many countries already.

Earlier in the euro docket, France’s Consumer Confidence came in above consensus at 94 for the month of October. In Germany, Import Prices surprised to the upside and rose 0.3% MoM in September and contracted 4.3% from a year earlier.

In the NA session, September’s advanced trade deficit is expected to shrink to $79.37 billion while Mortgage Applications expanded 1.7% WoW.

What to look for around EUR

EUR/USD loses momentum and retests the 1.1750 region against the backdrop of a persistent inflows into the safe haven universe. The outlook on EUR/USD remains positive, however, and bearish moves are deemed as corrective only. Further out, the positive bias in the euro remains underpinned by auspicious results from domestic fundamentals (despite momentum appears somewhat mitigated in several regions), the so far cautious stance from the ECB and the solid position of the EMU’s current account. In addition, the probable “blue wave” following the US elections is deemed as a negative driver for the greenback and carries the potential to lend extra legs to the pair in the longer run.

EUR/USD levels to watch

At the moment, the pair is losing 0.50% at 1.1736 and faces the next support at 1.1688 (monthly low Oct.15) followed by 1.1612 (monthly low Sep.25) and finally 1.1495 (monthly high Mar.9). On the other hand, a breakout of 1.1880 (monthly high Oct.21) would target 1.1917 (high Sep.10) en route to 1.1965 (monthly high Aug.18).


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 1.1779 S2: 1.1763 S3: 1.1733 R1: 1.1825 R2: 1.1855 R3: 1.1871
Trend Index
Recommendation : Bullish Strength : 1
OBOS Index
OBOS Index : Neutral

TIME
2020-10-28 14:02 GMT
Pair
USD/CAD
Summary
In a widely expected decision, the Bank of Canada (BoC) announced on Wednesday that it left its key rate unchanged at 0.25% following its October poli
Content

In a widely expected decision, the Bank of Canada (BoC) announced on Wednesday that it left its key rate unchanged at 0.25% following its October policy meeting.

In its policy statement, the BoC noted that there is an ongoing and significant slack in the Canadian economy and added that the gap between the actual and potential output is not expected to close until 2023.

Market reaction

The USD/CAD pair edged slightly higher with the initial reaction to the BoC's policy remarks and was last seen gaining 0.78% on the day at 1.3287.

Key takeaways as summarized by Reuters

"Will continue the QE program and recalibrate it."

"Will shift QE purchases towards longer-term bonds."

"Will hold the policy interest rate at the effective lower bound until economic slack is absorbed, sometime in 2023."

"QE total purchases will be gradually reduced to at least C$4 billion a week."

"With these combined adjustments, the QE program is providing at least as much monetary stimulus as before."

"QE shift to longer-term bonds will have a more direct influence on the borrowing rates that are most important for households and businesses."

"Despite continued low oil prices, C$ has appreciated since July, largely reflecting a broad-based depreciation of the US dollar."

"Bank of Canada projects 2020 GDP to fall by 5.7% compared to -7.8% in July central scenario; sees 2021 GDP +4.2% (vs +5.1%), 2022 GDP +3.7% (unchanged)."

"2020 Q2 annualized GDP was -38.7% (vs -43.0% in July central scenario), Q3 gdp +47.5% (vs +31.3%), Q4 +1.0%."

"Resuming practice of giving detailed growth & CPI forecasts because it better understands the effect of containment measures, support programs and medical developments."

"Uncertainty around projections remains extraordinarily high, forecasts assume extensive lockdown measures will not be reintroduced and a vaccine will be widely available by mid-2022."

"Near-term economic activity in Canada set to be affected negatively by measures taken to combat the recent increase in COVID-19 infections."

"There is a serious risk that broader or more intensive COVID-19 related restrictions could be required."

"Quarterly patterns of growth likely to be unusually choppy thanks to the impact of localized outbreaks and varied rates of recovery across industries."

"Fiscal policy will continue to provide important support to the Canadian economy throughout the recovery."

"Inflation expected to remain below 1% until early 2021, largely due to effects of low energy prices; 2021 inflation projected to be 1.O%, 2022 1.7%."

"Investment in oil/gas sector not expected to return to pre-pandemic levels over projection horizon; oil/gas investment seen falling roughly 30% in 2020 before rising just over 2% in 2021-22."

"QE purchases of longer-maturity bonds provide more monetary stimulus than purchases of shorter-maturity debt."

"About half of bond purchases have been bonds with terms to maturity of less than three years."


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 1.3147 S2: 1.3110 S3: 1.3077 R1: 1.3217 R2: 1.3250 R3: 1.3287
Trend Index
Recommendation : StronglyBearish Strength : -5
OBOS Index
OBOS Index : Neutral

TIME
2020-10-28 14:00 GMT
Pair

Summary
Canada BoC Interest Rate Decision meets expectations (0.25%)
Content

Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-10-28 13:56 GMT
Pair
EUR/USD
Summary
The French government is preparing to announce a stay-at-home order this week in an attempt to limit the spread of the coronavirus in the country, Reu
Content

The French government is preparing to announce a stay-at-home order this week in an attempt to limit the spread of the coronavirus in the country, Reuters reported on Wednesday, citing two sources familiar with the matter.

"The industry sources said that the new restrictions would be nationwide and similar in scope to a lockdown that was enforced in spring this year when hospitalisations and deaths caused by the virus reached a peak," wrote Reuters' Elizabeth Pineau and Michel Rose.

Market reaction

The EUR/USD pair showed no immediate reaction to this headline and was last seen losing 0.55% on the day at 1.1730.


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 1.1779 S2: 1.1763 S3: 1.1733 R1: 1.1825 R2: 1.1855 R3: 1.1871
Trend Index
Recommendation : Bullish Strength : 1
OBOS Index
OBOS Index : Neutral

TIME
2020-10-28 13:48 GMT
Pair

Summary
According to German newspaper Bild, a nationwide lockdown in the country could start as early as next Monday, November 2nd, if Chancellor Angela Merke
Content

According to German newspaper Bild, a nationwide lockdown in the country could start as early as next Monday, November 2nd, if Chancellor Angela Merkel comes to an agreement with the premiers of Germany's states, as reported by Reuters.

Earlier in the day, Reuters noted that a draft resolution suggested that the lockdown would begin on November 4th.

Market reaction

Safe-haven flows continue to dominate the financial markets on Wednesday. As of writing, Germany's DAX 30 Index was down 3.8% on a daily basis at 11,608.


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-10-28 13:42 GMT
Pair

Summary
Major equity indexes in the US opened with large losses on Wednesday as the coronavirus fears and the upcoming presidential election force investors t
Content
  • Wall Street's main indexes are posting heavy losses on Wednesday.
  • All major sectors of the S&P 500 trade in the negative territory.
  • Market mood remains dismal ahead of the presidential election.

Major equity indexes in the US opened with large losses on Wednesday as the coronavirus fears and the upcoming presidential election force investors to seek refuge. As of writing, the S&P 500 was down 1.93% on the day at 3,325, the Dow Jones Industrial Average was losing 1.82% at 26,966 and the Nasdaq Composite was falling 2.03% at 11,198.

Mirroring the intense flight to safety, the CBOE Volatility Index (VIX), Wall Street's fear gauge, is up nearly 14% on a daily basis.

All 11 major sectors of the S&P 500 trade in the negative territory. The Energy Index, the Communication Services Index and the Technology Index all lose more than 2% as the worst performers in the early trade. On the other hand, the defensive Utilities Index is losing 0.7%.

Earlier in the day, the data published by the US Census Bureau revealed that the trade deficit in September narrowed modestly to $79.3 billion but had little to no impact on market sentiment.

S&P 500 chart (daily)


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-10-28 13:25 GMT
Pair
GBP/USD
Summary
The UK government will not back down on its policy on fisheries, British Cabinet Minister Michael Gove said on Wednesday, as reported by Reuters. "The
Content

The UK government will not back down on its policy on fisheries, British Cabinet Minister Michael Gove said on Wednesday, as reported by Reuters.

"The European Commission has made clear it will not agree to third-country cumulation in any circumstances," Gove added in a letter sent to a Welsh lawmaker. "The trade deal with the EU remains our strong preference."

Market reaction

These comments don't seem to be having a significant impact on the British pound's performance against its rivals. As of writing, the GBP/USD pair was down 0.75% on the day at 1.2945.


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 1.3004 S2: 1.2963 S3: 1.2926 R1: 1.3083 R2: 1.3121 R3: 1.3162
Trend Index
Recommendation : Bullish Strength : 3
OBOS Index
OBOS Index : Neutral

TIME
2020-10-28 13:25 GMT
Pair

Summary
Gold added to its intraday losses and dived to three-week lows, around the $1877-76 region during the early North American session. The precious metal
Content
  • Gold witnessed some heavy selling on Thursday amid a strong pickup in the USD demand.
  • Weakness below the $1890 horizontal support further aggravated the bearish pressure.
  • The stage seems set for a fall to retest September monthly lows, near the $1849-48 region.

Gold added to its intraday losses and dived to three-week lows, around the $1877-76 region during the early North American session.

The precious metal struggled to capitalize on the previous day's modest uptick, instead met with some fresh supply near the top end of a three-day-old trading range. The sharp intraday fall was exclusively sponsored by a strong pickup in the US dollar demand, which tends to undermine dollar-denominated commodities, including gold.

Given the alarming pace of growth in new coronavirus cases in Europe and the United States, investors now seem concerned that renewed lockdown measures could prove detrimental to the already fragile global economic recovery. This, in turn, was seen as a key factor that provided a strong boost to the greenback's status as the global reserve currency.

The USD bulls largely shrugged off the uncertainty over the actual outcome of the US presidential election. It is worth reporting that national polls show Democrat rival Joe Biden has a lead over Republican incumbent President Donald Trump. Investors, however, remain wary on the back of a narrow gap in certain key swing states.

This, along with the lack of progress in the US stimulus talks dampened the market mood. This was evident from a steep decline in the equity markets. The anti-risk flow was reinforced by a fresh leg down in the US Treasury bond yields, albeit did little to revive the precious metal's safe-haven demand or lend any support.

Apart from a broad-based USD strength, Wednesday's downfall could further be attributed to some technical selling below the $1890 horizontal level. A subsequent breakthrough 100-day SMA support, around the $1886 region, for the first time since March might have already set the stage for an extension of the depreciating move.

There isn't any major market-moving economic data due for release from the US on Wednesday. Hence, developments surrounding the coronavirus saga will continue to play a key role in influencing the USD price dynamics and produce some short-term opportunities. Nevertheless, the XAU/USD now seems vulnerable to slide further towards September monthly swing lows support near the $1849-48 region.

Technical levels to watch

 


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-10-28 13:20 GMT
Pair

Summary
The greenback extends the buying momentum and tests weekly peaks in the 93.60 zone when tracked by the US Dollar Index (DXY). US Dollar Index underpin
Content
  • DXY’s upside momentum remains well in place near 93.60.
  • Pandemic concerns give extra sustain to the risk aversion.
  • US advanced trade deficit shrunk to $79.37 billion in September.

The greenback extends the buying momentum and tests weekly peaks in the 93.60 zone when tracked by the US Dollar Index (DXY).

US Dollar Index underpinned by risk-off mood

The index extends its march north in the middle of the week and reaches the 93.60 level on the back of prevailing risk aversion in the global markets.

Indeed, rising coronavirus cases and the re-implementation of lockdown-like measures across Europe continue to give support to the resumption of the risk aversion and the ultimate demand for the safe havens.

In the US data space, advanced trade figures for the month of September showed the trade deficit is expected to shrink to $79.37 billion. Earlier in the session, weekly Mortgage Applications expanded 1.7% according to MBA. Later in the session, the EIA will report on the weekly variation of US crude oil inventories.

What to look for around USD

The index manages to regain the area above the key 93.00 barrier so far this week. The current recovery in the dollar comes in response to the impact of the COVID-19 pandemic on the global growth prospects as well as fading chances of a deal between Democrats and Republicans over a new stimulus bill. However, the stance on the dollar is likely to deteriorate in case of a “blue wave” following the presidential elections next month, while the “lower for longer” stance from the Federal Reserve also caps occasional bullish attempts.

US Dollar Index relevant levels

At the moment, the index is gaining 0.52% at 93.57 and a break above 93.90 (weekly high Oct.15) would expose 94.20 (38.2% Fibo retracement of the 2017-2018 drop) and finally 94.74 (monthly high Sep.25). On the other hand, the next support is located at 92.47 (monthly low Oct.21) followed by 91.92 (23.6% Fibo of the 2017-2018 drop) and then 91.80 (monthly low May 2018).


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-10-28 13:15 GMT
Pair
USD/CHF
Summary
After breaking above 0.9100 during the European trading hours, the USD/CHF preserved its bullish momentum and touched its highest level since October
Content
  • USD/CHF is rising for the third straight day on Wednesday.
  • US Dollar Index climbs to nine-day highs above 93.60.
  • S&P 500 futures are down nearly 2% ahead of the opening bell.

After breaking above 0.9100 during the European trading hours, the USD/CHF preserved its bullish momentum and touched its highest level since October 19th at 0.9128. As of writing, the pair was up 0.4% on the day at 0.9122.

DXY rises for the third straight day

The broad-based USD strength remains the primary driver of USD/CHF's movements on Wednesday. The US Dollar Index (DXY), which posted small gains and closed above 93.00 on Tuesday, capitalized on safe-haven flows and climbed to its highest level in more than a week at 93.64. At the moment, the DXY is up 0.5% on the day at 93.55.

Reflecting the risk-averse market environment, the S&P 500 futures are down nearly 2% on the day, suggesting that Wall Street's main indexes look to start the day deep in the negative territory. Additionally, the 10-year US Treasury bond yield is losing more than 2%, confirming the view that safe-haven flows are likely to continue to dominate the markets.

Meanwhile, the only data from the US showed on Wednesday that the trade deficit in September narrowed $79.4 billion from $83.1 billion in August but was largely ignored by the market participants.

Technical levels to watch for

 


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 0.9066 S2: 0.9046 S3: 0.9030 R1: 0.9102 R2: 0.9118 R3: 0.9138
Trend Index
Recommendation : StronglyBearish Strength : -5
OBOS Index
OBOS Index : Neutral

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