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GBP/USD jumps through 1.30 as Brexit deadline extended

EUR/CHF – Daily Candlesticks
Source: GKFX / MT4 (October 14, 2020)

EUR/CHF has broken a shallow rising trendline and is challenging the bottom of a 3-month old trading range between 1.073 and 1.083, suggesting a possible break lower into a new downtrend.

TAKEAWAYS


•    GBP/USD rose back over 1.30 after UK relinquished Oct. 15 deadline
•    Fading pre-election US stimulus hopes hit stock markets
•    Bank of America and Wells Fargo miss estimates, Goldman beats on bond trading
•    Q3 Earnings Today: Morgan Stanley, Fast Retailing, Walgreens Boots Alliance
•    DAY AHEAD: Australian unemployment, China CPI, Philadelphia Fed manufacturing 
 

GURU WISDOM


 “We are fond of saying that if these strategies are truly horribly overcrowded then someone has apparently forgotten to tell the prices.” – Clifford Asness
 

MARKETS


The British pound was a standout gainer, rallying quickly through the key 1.30 level versus the dollar on Wednesday. (GBP/USD rallied off the bottom of the rising channel in yesterday’s market update). FX markets more broadly were sluggish amid a lack of major catalysts.

Wall Street turned lower for a second day with coronavirus concerns weighing on sentiment as a stimulus breakthrough between Republicans and Democrats proved once again elusive. European stocks were lower too. Online fashion retailer ASOS shares dropped 10% after the company reported a tripling of profits but offered weak forward guidance. The rally in Chinese shares took a pause after the value of the market reached a new record high the day prior as President Xi gave a speech.

Gold and silver prices saw modest gains after a sharp slide on Tuesday with gold rising back above the $1900 round number. The price of oil gained after US inventories fell by 5.4 million barrels last week according to the API, showing firmer demand.
 

US Stimulus latest

 
The back and fourths between chief negotiators Treasury Secretary Steve Mnuchin and House Speaker Nancy Pelosi continue. On Wednesday it was Mnuchin that poured cold water over the hopes of an imminent deal, saying “getting something done before the election and executing on that would be difficult.” Talks are set to continue Thursday.


China stocks record value
 
We have referenced the bid in China stocks since the return from holidays last week. Bloomberg confirmed on Wednesday that the market capitalisation – that’s the total value – of all large cap China stocks on the Shanghai and Shenzhen exchanges reached a new record high this week. The value of all the China-listed companies has surpassed $10 trillion – a level in the past that has seen investors take profits or the government take action to prevent overheated markets. Neither seems on the cards this time in what has been a much more measured gains. 
 

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