US Markets

BUZZ-COMMENT-US recap: EUR/USD rises as dollar relinquishes safe-haven gains late

Credit: REUTERS/Thomas White

The dollar eased late on Friday, tracking Treasury yields lower and relinquishing gains scored when optimism over a pre-election relief bill faded [nL1N2HE0ZN][nW1N2G500I].

Oct 23 (Reuters) - The dollar eased late on Friday, tracking Treasury yields lower and relinquishing gains scored when optimism over a pre-election relief bill faded .

In a mixed day for risk sentiment, progress toward a Brexit deal was overshadowed by troubling pandemic news .

EUR/USD managed modest gains, mostly on the sizeable EUR/GBP rise following the UK's downside PMI miss versus a roughly on-forecast euro zone PMI composite , even though Britain's reading remained in expansion above 50 while Europe contracted.

EUR/USD found good technical support in its earlier dip to the 10-day moving average , but hasn't been able to clear this week's high due to some risk aversion demand for the dollar, despite the above-forecast U.S. Markit PMI composite reading of 55.5 versus 54.3 in September .

Ten-year Treasury yields were on track to end a six-session rise, a move that has become overbought with pandemic relief still uncertain.

Sterling was whipped around by the UK PMI miss then a fleeting spike to the 1.3122 session high on a report of potential compromise on EU-UK fishing rights , a key Brexit issue.

That was followed by a rapid slide to session lows by the 55-day moving average at 1.3018, which it had vaulted above during Wednesday's wild advance.

Wednesday's 1.3177 high and October peak completed a 61.8% Fibo of September's slide at 1.3173 before beginning a retreat before the weekend.

USD/JPY was a shade lower, but the two havens -- dollar and yen -- seem to have found some stability in the 104.00s yet again. Early losses were reduced by the risk-off dollar demand in U.S. trade . The 104.93 high on EBS retraced 50% of Wednesday's tumble, but the bigger hurdles are by 105.05. September's 104 low is now key support.

High beta currencies were little changed after a flat finish for USD/CNY. AUD/USD's overnight rally after decent PMI data was roundly rejected by the falling 30-day moving average, tucked below the cloud base and downtrend line from September.

Oil fell under the weight of rebounding Libyan oil supply after a truce between warring factions and general unease about demand during the ongoing pandemic and with doubts about when more U.S. fiscal relief might arrive.

The BOJ and ECB meet next week, but neither is expected to change policy, though hints at future easing will be watched. Q3 GDP estimates for Europe and the U.S. come out on Friday.

For more click on FXBUZ

(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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