IFX Market Report: Thursday 29th October 2020

After opening today’s session in the 1.29’s, cable is now back up to 1.30 as the market grows anxious of the upcoming U.S. presidential election in 5 days. Since the open GBPEUR has also been on the advance, as the EUR weakens off with a dovish ECB message expected today, the central bank is likely to leave policy unchanged.

In yesterday’s session GBPUSD opened the day just above the 1.30 mark at 1.3004. After struggling throughout the session, the pair was unable to maintain itself at this range and closed the day at 1.2981.

Despite the depreciation not being as severe, on Wednesday we GBPEUR also closed below where it opened the day. The pair opened at 1.1065 and closed at 1.1047.

The main event today is the ECB Interest Rate decision at 12:45. As already noted, economists expect the ECB to leave policy unchanged at -0.50% – but given the recent violent spike in COVID-19 cases, Lagarde and co may feel action is necessary. Given the recent lockdowns of France and Germany it is plausible that the ECB could expand their Pandemic Emergency Purchase Program (PEPP) in order to support the economy though this difficult time. Another strategy that could be employed by the ECB is that they accelerate the pace of bond-buying, thus putting more money into the economy.

Across the pond, as the U.S. election quickly approaches both candidates were out in full force yesterday. At a rally in Arizona the president was very quick to slander his democratic opposition, noting his disdain for new lockdown measures. Mr Trump said that “if you vote for Joe Biden it means no kids in school, no graduations, no weddings, no thanksgivings, no Christmas, and no Fourth of July together… can’t see anybody…” The president went as far as to say that the election is “a choice between a Trump super-recovery and a Biden depression. In contrast, Biden took a slightly more selfless approach, asserting that “if I win, it’s going to take a lot of hard work to end this pandemic… I do promise this: We will start on day one doing the right things”.

On the data front, a busy schedule today; aside from the Interest Rate decision from the ECB, we also have Consumer Confidence, Economic Sentiment, and Industrial Sentiment from the Eurozone. Then from the U.S., in the afternoon we have GDP Growth rate and the weekly Jobs report.

Older posts
Newer posts