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Intermarket:
- SP Futures 3235 (-2.08%)
- EUSTXX 2895 (-1.87%)
- Crude Oil 35.35 (-1.19%)
- US 10YR 0.84
- EurUsd 1.1682 (+0.08%)
- UsdJpy 104.22 (-0.34%)
- DAX 11352 (-1.89%)
Despite a brief recovery during Thursday’s NY session, risk assets remain under pressure into Friday following Mnuchin’s comment that House Speaker Pelosi incorrectly characterized the state of negotiations in a letter that was released Thursday. He said Pelosi has “refused to compromise” on major pillars of a deal. Then markets also absorbed the news that Apple announced it will close 17 of its 20 stores in France effective Friday Oct 30 due to Covid-19.
Story in the Times: England is heading for a national lockdown by proxy as 60% of the population will be under strict curbs. The curbs will mean that 21 million people are under Tier 2 restrictions and a further 11 million under Tier 3, meaning 32 million people are under higher tiers.
At the same time, Catalonia, Cantabria and Valencia closed their borders to other regions yesterday as the Spanish parliament approved a six-month state of emergency to deal with a surge in coronavirus infections. Of the 17 regions 13 have closed their borders as the second wave of the pandemic sweeps across the country.
Newsflow remains negative into month-end.
Matters that Matter:
• Global coronavirus cases rise by single-day record of half a million
• China to increase incomes, expand middle class in 2021-2025- state planner official
• G20 finance officials set Nov 13 meeting to finalize debt framework - sources
• AU Q3 PPI YY, -0.4%, -0.4% prev
• Bank of Canada keeps some dry powder as Ottawa spends
• Reuters News: Apple Inc to temporary close 17 out of 20 stores in France starting today Oct 302
• Attempts to strike a deal unlocking the EU’s 1.8 trl budget package have stalled and Covid-19 relief funds may be delayed as a result – FT
• England headed for lockdown “by proxy” – Times
• Spain under 6-mth coronavirus state of emergency
Majors 1-Day View:
USDJPY
- Prices posted a bullish outside day on Thursday, stalling the downwards move. However, sellers returned in Asia, weakening the outlook and reversing almost all of Thursday’s gains. As such, we prefer to sell a rally towards 104.50s.
- Selling into rallies still the main play.
- Opex a factor today: 104.00 1.4Bln, 104.50-60 2.6 Bln, 104.80-105.00 3.1Bln.
EURUSD
• Prices posted the 3rd lower daily high & low in a row on Thursday, with losses of over ¾ Big Fig. While signals remain negative into Friday, caution is advised as prices are now extended on the week so the odds of continuation are reduced.
• Bias still down on ECB easing bias, France/Germany/Spain (&Italy soon enough) locking down parts of the country.
AUDUSD
• After Wednesday’s bearish outside day, prices posted a lower daily high & low yesterday breaching the Oct 20 lows and reaching .7000. As such, signals remain bearish today but as prices are extended on the week, we prefer to sell rallies towards Asia highs.
• Moves in Asia driven by USDCNH.
• Bids reported around .7000 with offers around .7080s.
GBPUSD
• Prices posted the 2nd lower daily high & low in a sequence yesterday, with losses of over ¾ Big Fig. As such, signals remain bearish but we prefer to sell rallies towards 1.3000.
• Brexit still the main issue for the Pound.
• Bias still lower as England moves towards a lockdown “by proxy”.
FX Relative ATR Grid
Comment: Ranges remain healthy into Friday, especially on JPY and USD pairs. However, most trending instruments have passed weekly ATR limits and as such, the odds of continuation are low into Month end.
FX Relative Strength Grid
Comment: the main signals going into Friday are JPY and USD strength vs, EUR, CAD, AUD weakness.