IFX Market Report: Wednesday 30th September 2020

After a fascinating first debate between US President Donald Trump and his challenger Joe Biden, we have seen the safe-haven greenback strengthen, gaining ground on both sterling and euro.

There were several topics up for debate last night in Cleveland, with America currently experiencing one of its most devastating periods of history – both economically and socially. In the latest opinion polls, Joe Biden has a steady single-digit lead over the current President. Polls also suggest that 1 in 10 Americans are yet to make up their mind on whether to vote Republican or Democrat – only increasing the uncertainty leading up to November’s election.

In response to the dollars rise, cable depreciated slightly throughout the night and opened today at 1.2816. Yesterday however, GBPUSD held firm, opening at 1.2852 and dipping just slightly, closing off at 1.2844.

Greenback strength was more detrimental to the single currency, with EURUSD losing its important grip on 1.17 by the end of yesterdays session. The pair opened at 1.1674, and showed little resilience to a bullish dollar, closing off the trading day at 1.1716.

In regard to US macroeconomic data, today we have a packed schedule in form of GDP, Mortgage Applications and Labour reports. The final Q2 USD GDP is set to confirm an annualized contraction of 31.7%. Although a substantial rebound is expected in Q3, taking into account the previous was -5%, Q2 will prove to be a disastrous figure for the US economy to take.

As for Brexit, little has been confirmed and nothing significant agreed. The usual stories concerning fishing, Northern Ireland and other such issues continue to fill the tabloids, but we are yet to hear anything concrete from Westminster itself. The continued uncertainty and consequential risk weighs heavy on the pound – which at any time, given apt reason, could tumble momentously and lose all ground against its peers.

GBPEUR is evidently feeling the strain of the UK and EU’s unclear future. The pair opened weak at 1.1009 in the morning, by the close it had fallen into the 1.09’s, closing off finally at 1.0963.

On the data front, in the morning we have the Unemployment Rate from Germany, and Final UK Q2 GDP Growth Rate, forecasted to come in at -21.7%. In the afternoon, along with the plethora of notable US releases already mentioned, we also have speeches from Fed members Kashkari and Kaplan.

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