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Intermarket:
- SP Futures 3433 (+0.30%)
- EUSTXX 3212 (-0.75%)
- Crude Oil 40.80 (-0.61%)
- US 10YR 0.76 (+0.17%)
- EurUsd 1.1780 (+0.09%)
- UsdJpy 105.53 (+0.09%)
- DAX 12750 (-0.78%)
The lack of progress on US fiscal stimulus talks weighed on global risk sentiment. Amazon, Facebook and Microsoft dropped the hardest. There will be a stand alone vote on more Paycheck Protection funds today followed by a vote on a limited $500 billion stimulus bill tomorrow. If nothing happens by end of day today, risk sentiment will likely fall further and weigh even more on Aussie and Kiwi.
RBNZ Governor Adrian Orr and RBA Assistant Governor Kent spoke during Asia trade. The RBNZ is prepared to use more tools in order to maintain an accommodative stance, while RBA Kent said it would not be unexpected for the BBSW to drop below zero. In the meantime, RBA Minutes released this morning further strengthened bets that the central bank will announce further easing on Nov 3.
Looking ahead: BOE’s Vlieghe, ECB’s Hernandez de Cos, and Fed’s Quarles, Evans, Brainard and Bostic are speaking. There is no data of consequence.
Matters that Matter:
• Australia central bank discussed case for further easing in October – RBA minutes
• Pelosi, Mnuchin narrow differences on aid bill, Pelosi spokesman says
• Philly Fed Harker – Tolerating higher inflation worth it to help achieve employment goals
• Brexit brinkmanship: UK says no to more EU trade talks
• UK economic recovery faltering, BoE to step up spending, 40% chance of no EU-UK trade deal – Reuters poll
• RBNZ’s Orr suggested the Bank is prepared to use more tools and there is plenty of room left in the QE program.
• Varadkar: New Irish lockdown will see 150,000 people laid off; new lockdown measure will cost EUR1.5bn; we can borrow enough to cover 2020, 2021
• Mitch McConnell: Senate will vote to move past all-or-nothing obstruction on Covid-19 relief
Majors 1-Day View:
USDJPY
- Trending signals remain weak, but a developing trend of higher daily lows leaves a slight bullish bias into Tuesday.
- More direction seen on the crosses with AUDJPY heavy and Forrest M&A Flows
- Opex for today a factor: 105.60 for 880 Mln approx
EURUSD
• Prices remain contained within the recent 4-week range. For this reason, despite Monday’s positive momentum, we prefer to play the range and sell between yesterday’s top and 1.1800.
• Sentiment bearish on rising Covid cases in Europe.
• Gains unlikely to hold.
AUDUSD
• After posting a bearish engulfing at the weekly level, prices posted yet another bearish engulfing at the daily level, keeping signals negative for Tuesday.
• Sentiment remains bearish as RBA confirms easing bias.
• Lack of US fiscal stimulus will weigh on Aud alongside risk appetite.
Contacts report a .7050 put strike maturing today for 650 Mln. Bids reported around .7000, offers .7100.
GBPUSD
• Signals remain mixed amidst volatile rangebound trading. However, with sellers returning to the market from 1.3000 yesterday, we favour cautious shorts on rallies towards 1.3000.
• Markets trading on Brexit headlines as brinkmanship continues.
• Focus also on Covid-19 response.
FX Relative ATR Grid
Comment: Ranges expanded on Monday, leaving decent trading conditions for today.
FX Relative Strength Grid
Comment: the main signals going intoTuesday are AUD weakness, NZD weakness vs. CHF strength and EUR strength.