Here is what you need to know on Friday, October 23:
The American dollar remained under selling pressure at the end of the week, amid political jitters in the US. Republicans and Democrats have continued to discuss a coronavirus stimulus aid package, reporting progress in discussions and indicating that they were “almost there” on an agreement. At the same time, however, politicians said that chances of a bill being approved before the presidential election are quite slim.
The EUR/USD pair settled at the upper end of its latest range, around 1.1860. Speculative interest ignored coronavirus-related news coming from the EU, as several countries reported record numbers of new cases while the health systems are showing their first signs of stress.
Governments have refused to impose full lockdowns, but are clearly moving in such direction, which will mean a further delay in a possible economic recovery. Things in the US, however, are no better, as the country a record high of 82,668 cases on Saturday. The world reported roughly 490K new contagions on Friday.
GBP/USD finished the week above 1.3000, with limited bullish potential. Investors are cautiously optimistic about Brexit talks after French President Emmanuel Macron has said to the local fishing industry to brace for impact, somehow indicated that a deal is closer.
Commodity-linked currencies held within familiar levels throughout the week, trapped between the broad US dollar’s weakness and lower gold and oil prices. Gold settled around $1,900 a troy ounce while WTI finished the week below $40.00 a barrel.
The US presidential campaign heated up after the final debate between Donald Trump and Joe Biden. As of today, Biden is still leading national polls, although Trump seems to be cutting off the distance as the date approaches.
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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