US Markets

BUZZ-COMMENT-US recap: EUR/USD edges higher as dollar's safe-haven appeal dwindles

Credit: REUTERS/DADO RUVIC

The dollar retreated versus the euro and other major currencies as markets settled into a pre-election period of disappointment about the lack of new COVID-19 relief [nL1N2HI13G] and uncertainty over the Nov. 3 vote.

Oct 27 (Reuters) - The dollar retreated versus the euro and other major currencies as markets settled into a pre-election period of disappointment about the lack of new COVID-19 relief and uncertainty over the Nov. 3 vote.

EUR/USD again found demand below 1.18, but recorded its fourth consecutive lower daily high as COVID-19 cases expanded in Europe , including Germany, which handled the first wave better than most .

EUR/USD's resilience is keeping alive prospects to test September's high.

Markets' unease manifested in 10-year Treasury yields falling to one-week lows and wobbly stocks after Monday's tumble, but risk-aversion flows provided less dollar support than recently .

U.S. September durable goods beat forecast , but consumer confidence edged lower as falling expectations weighed , highlighting pandemic and elections risks ahead, rather than the Q3 recovery.

GBP/USD topped Monday's high, but gains were tamed somewhat by an October CBI retail sales swing to -23 from +11 in September as UK pandemic news grew increasingly dire . Brexit-deal hopes remain sterling-supportive .

The yen siphoned off some support from the dollar as a top haven currency , threatening last week's 104.345 EBS low, with September's 104 nadir eyed below. A close below 104.50, the 76.4% Fibo of the September-October recovery, would increase the risk of testing 104 support.

Monday's 105.055 EBS high held exactly at key kijun and other tech hurdles. Implied vols are surging beyond next Tuesday's U.S. election, while Bolli bands expanded bearishly from their tightest since 2014 registered on Oct. 20.

AUD/USD's rise again ran into the falling 30-day moving average at 0.7148. Encouraging comments from RBA Deputy Governor Guy DeBelle ahead of next Tuesday's RBA meeting that's seen cutting rates 15bp to 10bp, and a positive October Markit PMI of 53.6 versus 50.5 in September, as well as successful COVID-19 containment, look supportive.

USD/CNH was relatively flat as the markets onboarded the new trading freedom the yuan has earned from the PBOC after a 6% rally against the dollar amid strong inward investment demand .

Oil prices got a likely short-lived bounce from storm closures in the Gulf of Mexico that will again be outweighed by pandemic-dented transportation demand and renewed Libyan output.

The next cluster of event risks come on Thursday, including ECB and BOJ meetings -- no change expected at either -- Q3 GDP reports and quarterly earnings reports from U.S. tech giants.

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(Editing by Burton Frierson Randolph Donney is a Reuters market analyst. The views expressed are his own.)

((Randolph.donney@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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