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EURUSD: market awaits new drivers

The EURUSD pair traded to the upside on Thursday, October 1. The single currency gained 0.21% against the dollar, to close at 1.1744. Yesterday was an eventful day, with the market experiencing heightened volatility. Cable set the tone for trading.

GBPUSD traded in a range of 159 pps. The pound sterling first slipped to 1.2820 on the back of a Reuters report that negotiators were unable to bridge differences over the coronavirus relief bill. The price action then zoomed up to 1.2975 after a Financial Times reporter tweeted that officials in London were more optimistic about the post-Brexit EU deal, while fishing remains the final sticking point.

A spokesman for PM Boris Johnson said the UK-EU negotiations were conducted in a constructive spirit and London is working hard to clinch a deal.

As for cable, EURGBP closed at 1.2884 (-0.22%). As for EURUSD, the amplitude of movement was narrower, while the EURGBP cross exerted a strong impact on the pair. On the day, the euro rose 0.21%, to 1.1744 against the dollar.

Todays macro agenda (GMT+3)

  • 12:00 Eurozone: CPI (September)
  • 15:30 US:  labor market report (September): unemployment rate, nonfarm payrolls, private sector employment, average hourly earnings, average weekly hours, participation rate
  • 16:30 Fed Harker speech
  • 17:00 US: Michigan consumer expectations (September)
  • 17:00 US: factory orders (August)
  • 20:00 Baker Hughes weekly oil rig count
1

Current outlook

The market continues to experience heightened volatility, with Covid-19 grabbing the headlines every day.

The Spanish Ministry of Health has decided over the next few days to impose mobility restrictions in Madrid and 10 of the other most populated municipalities in the region near the capital due to the alarming spike in coronavirus cases.

French authorities could also announce new restrictive measures. French Health Minister Olivier Veran has warned citizens that new lockdown measures could be taken in the Greater Paris area as early as Monday. The government plans to decide on whether to introduce new mobility restrictions on Sunday.

Trump dropped a bombshell in his tweet that he and Melania tested positive for Covid-19. The market initially reacted by buying into the yen and the dollar, although prices stabilized before long. The market situation will largely depend on Trump's health. The president’s age group makes him more vulnerable to the virus.

Trump's attending physician says he is doing well. That said, in the run-up to the US presidential election (November 3), the whole world will be riveted on his tweets, and the markets will lurch up and down on the myriad of rumors surrounding his health.

On Friday, all eyes will be on the US jobs report, as well as news about progress in the coronavirus relief bill. The single currency may continue to hover in the vicinity of 1.1725 up until 12:30 GMT. The trading range is 1.1700 - 1.1760 for the European session, and 1.1650 - 1.1785 for the North American session.

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