10th November 2020 - Vaccine news was positive for risk sentiment but also for the US dollar.


Good Morning,

Market Headlines

Sentiment surged on some positive on reports that the Pfizer coronavirus vaccine has shown more than 90% effectiveness in preventing COVID-19, while no serious safety concerns have been observed. The positive news saw the S&P 500 rally 2.5%, the Dow Jones was +4.5%, whilst the NASDAQ underperformed with small losses. US 2yr treasury yields rose from 0.15% to 0.19%, while the 10yr yield rose from 0.80% to 0.93%. Australian 3yr government bond yields (futures) traded around 0.17%, while the 10yr yield rose from 0.76% to 0.93%. Commodities, Brent crude oil futures rose 8.1% to $42.65, copper rose 1.4%, and iron ore rose 2.9% to $121.50, while defensive gold fell 4.9%.

Currency

AUD/USD: 0.7267 – 0.7340 (a two-month high)

EUR/USD: 1.1795 – 1.1920

GBP/USD: 1.3119 – 1.3207

USD/JPY: 103.46 – 105.64

USD/CAD: 1.2928 – 1.3030

NZD/USD: 0.6797 – 0.6854 (a fresh 20-month high)

AUD/JPY: 75.28 – 77.04

AUD/NZD: 1.0680 – 1.0730

AUD Thoughts

Increased risk appetite buoyed trade-related currencies on Monday amid more optimism for the world economy following the Joe Biden victory and the Pfizer Inc PFE news. The offshore Chinese yuan hit its strongest in 28 months and the Aussie rallied to a high of 0.7338 before falling back to 0.7266 on US dollar strength.

China’s CPI & PPI inflation will be closely watched today.

AUD/USD traded to a high of 0.7338 overnight before USD demand pushed the local unit back to the 0.7280 region. Expect demand should materialise if we see any dip back toward 0.7200/20 while offering interest above the overnight highs and again at 0.7380 should slow any intra-day advancements.

Event Risk Data Today

Australia: The October NAB business survey will capture reactions to the Budget and the economy’s continued reopening.

New Zealand: October card spending expected to rise 3.0%, with weekly spending gauges pointing to firm durables demand.

Japan: The September current account surplus is expected to stabilise around JPY2025.1bn after widening in August.

China: The market anticipates that the PPI will continue to contract in October (market f/c: -1.9%yr). Meanwhile, the October CPI should moderate in the face of decelerating food price growth and sluggish underlying inflation (market f/c: 0.8%yr).

Euro Area: The widespread return to lockdown will cast a shadow over the November ZEW survey of expectations.

UK: The ILO unemployment rate is forecast to reach 4.8% in September. Ahead, the extension of the wage subsidy will provide crucial support.

US: The October NFIB small business optimism index is set to remain broadly stable at 104.4. However, the election outcome and resultant tax implications may pose a risk going forward. Following this, September job openings from the JOLTS report are expected to remain around 6500k, but labour market conditions vary substantially between sectors. Finally, the FOMC’s Quarles, Rosengren and Kaplan will speak.

Recent Posts

See All

Disclaimer

This material is provided by Navigate Global Payments (Navigate) ACN 615 699 888, AFSL 502711.  The material contains general commentary only and does not constitute investment or any other advice.  Certain types of transactions, like futures, options and high yield securities can be risky, and not suitable for all investors.  This information has been prepared without considering your objectives, financial situation or needs.  Please seek your own independent legal or financial advice before proceeding with any investment decision.  The information is believed to be accurate at the time of compilation and is provided in good faith.  Navigate does not warrant the accuracy or completeness of any information contributed by a third party. The information is subject to change without notice and Navigate is under no obligation to update the information. The information contained in this material are opinions of the author at the time of writing and does not constitute an offer, recommendation to act, a solicitation of an offer, or an inducement to subscribe for, purchase or sell any financial instrument or to enter a legally binding contract.  This information, including any assumptions and conclusions is not intended to be a comprehensive statement of relevant practise or law that is often complex and can change.  Past performance is not a reliable indicator of future performance. Any forecasts given in this material are predictive in character.Navigate Global Payments Pty Ltd nor its related parties or officers accepts no liability whatsoever for any loss or damages suffered through any act or omission taken as a result of reading or interpreting any of the information contained or related to this site.