U.S. Dollar Safe-Havening it with Uncertainty
OCTOBER 15, 2020
The U.S. Dollar is dominating coming into this trading session as markets worldwide are feeling the pressure of fiscal uncertainty in the U.S. as well as the need for restrictions as a new COVID-19 wave hit.
Reports from across the Atlantic are primarily focused on the national governments’ need to rein in the situation and figure out a way to allow certain mobility during the day with curfews at night. A complete shutdown of national economies is what is trying to be avoided, yet infections keep meeting daily records. Furthermore, the switch from risk-on to risk-off is due to the heavy burden of no spending bill here in the U.S. that can put traders and business leaders at ease.
Earlier release of Jobless Claims show that Initial increased by more than expected and Continuing failed to fall below 1MM. Things can change at any hour, but at the moment many are wondering if they need to hold tight until the election, but that brings a volatility of its own. The economic data feels mixed with the Empire Manufacturing survey looking less rosy than anticipated yet the Philadelphia Business Outlook had its highest reading since February. Expect more breaking news to dictate flows and unexpectedly cause swings at any given time.
What to Watch Today…
- Half a dozen Fed speakers throughout the day
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The Euro is trading at its lowest point since the start of the month and is looking for guidance as the Europeans look for a Brexit solution and the European Central Bank communicates its goals. Today expect statements to make news from Christine Lagarde as the European Central Bank leader speaks to the International Monetary Fund.
One point of concern recently has been the lack of cohesiveness in Spain in recent months as the rise in infections has been met with skepticism from the population and political parties looking to make the government look like it is exercising the wrong approach.
Prior to the pandemic, the nation was having political friction that forced several elections in trying to form a government. We shall see how much this idiosyncratic development puts pressure on the shared currency.
The British Pound came down some overnight primarily as a result of the new restrictions set for London and other heavily affected British regions.
While Brexit continues to be a dark cloud, along with the push for Scottish Independence because of it, the focus now is on the U.K.’s ability to remain open and to keep the economic recovery at a growing pace.