Daily FX Wrap: Loonie lower post-BoC, but Pound pares losses on Brexit ‘progress’

USD/XAU/JPY

Risk aversion remains rife, but the Greenback is off best levels after the DXY breached 93.500 to peak at 93.648 amidst all round FTQ demand that prompted GOLD to give up Usd 1900+/oz status and repelled Yen advances towards 104.00. Xau/Usd subsequently retreated through the 100 DMA at Usd 1877 and Usd/Jpy is hovering around 104.25, albeit still retaining a downside bias in contrast to other Usd/major and EM pairs. The catalyst for the latest and more acute safe-haven scramble is the ongoing acceleration in COVID-19 cases and fatalities that has forced more countries to consider returns to tighter restrictions, including partial and full lockdowns, curfews and border controls. However, the US is not immune pandemic resurgence and essentially resigned to stimulus limbo until after the Presidential election, while a few currency rivals are regaining some composure due to specific factors/impulses.

AUD/NOK/NZD/CAD

The increasingly negative/bearish tone with spill-over to crude and the commodity complex as a whole, has taken its toll on the Aussie, Norwegian Crown, Kiwi and Loonie, though the latter is also digesting post-policy meeting BoC press conference and Q&A headlines after tweaks to the QE remit that will now be skewed to the longer end of the curve. Aud/Usd has been under 0.7050 having retreated from 0.7150+ in wake of a mixed Q3 CPI report and losing grasp of the 100 DMA (0.7111), Eur/Nok within a whisker of 11.0000 compared to 10.8000 at one stage, Nzd/Usd down to 0.6630 vs 0.6720 at the other extreme and Usd/Cad above 1.3330 from sub-1.3180 when risk-off positioning was considerably less pronounced.

CHF/GBP/EUR

Relative G10 ‘outperformers’ or at least holding up better than the rest, as the Franc regains an element of safety premium around 0.9100 against the Buck and especially vs the Euro either side of 1.0700 on the eve of the ECB that could prompt an SNB response if overtly dovish to the further detriment of the single currency. At present, Eur/Usd has bounced off a fresh w-t-d base within a 1.1797-1.1719 or so range, but Cable has been able to mount an even more impressive recovery from the low 1.2900 area to revisit 1.3000 following positive reports on UK-EU trade talks via sources suggesting progress on some of the biggest issues of divergence between the 2 sides, raising prospects that a Brexit agreement may be reached early next month.

SEK/EM

Not much time for the Swedish Krona to relish a resumption in consumption or pick-ups in morale across the board, as Eur/Sek retraced from 10.2700 to circa 10.3900, while EM currencies were also undermined by Wednesday’s sharp deterioration in sentiment, with little solace for the SA Rand from the medium term budget and none whatsoever for the Turkish Lira from a rise in economic confidence or CBRT inflation report. Note, the latter merely accentuated doubts about credibility after last week’s shock unchanged rate verdict given a jump in the year end inflation estimate to 12.1% from 8.9%. Usd/Zar and Usd/Try are both nearer the upper end of respective 16.0920-6945 and 7.9628-8.3210 bands.

28 Oct 2020 - 16:35- Forex- Source: newsquawk