News and Market Analysis

13 November North America Close

The Dollar was modestly lower in N.Y. trade on Friday, resulting in the DXY falling from
lows of 92.91 to 92.75 in early afternoon. Major Dollar pairings were largely held to
narrow trading bands, but risk-on conditions weighed fairly broadly on the safe-haven
Greenback. Wall Street rallied, with markets holding out hope for a Covid vaccine sooner
rather than later, and apparently looking through the current virus spikes seen in the
U.S. A number of vaccine candidates could be ready for partial distribution by year-end,
though it will take months for a widespread distribution to be completed. Treasury
yields were little changed. Incoming U.S. data saw headline October PPI a bit warmer
than forecasts, while the U. Michigan sentiment index was softer than expected. Neither
report had much influence on markets. EUR-USD rallied from 1.1808 lows to 1.1833,
while USD-JPY eased from 104.93 to 104.57. USD-CAD bucked the trend, rallying to
1.3173 from early lows of 1.3127. GBP-USD meanwhile, topped at 1.3192, up from midmorning lows of 1.3150.

EUR-USD moved from early lows of 1.1808 to 1.1833 at mid-afternoon on Friday, with
narrow ranges persisting amongst most major Dollar pairings. The risk-on backdrop has
kept modest pressure on the USD through the session, though looking ahead, risk-on is
not necessarily likely to become a regular feature given the rise in Covid cases,
hospitalizations, and deaths. Additional lockdowns in Europe and the U.S. are expected
to continue to crimp the economic outlook, perhaps weighing on the risk-backdrop. Of
note, Biden Covid advisor is mulling a 4-6 week U.S. shutdown. For now, recent EURUSD ranges between about 1.1900 and 1.1750 should hold up.


GBP-USD rallied from 1.3150 at mid-morning to 1.3192 highs after the London close.
The pairing had come from overnight lows of 1.3109 seen in Asia. Several factors
appeared to be at play. One was equity market gains, which generally weighed on the
haven USD. Another factor was the political developments on Downing Street, with the
departure of the government’s director of communications, and news that Dominic
Cummings will leave his advisory role by Christmas, being read as a weakening in the
influence of the ‘Vote Leave’ campaigners, meaning there could be a softer, more
pragmatic attitude to Brexit, although it is not yet clear what shape the new
administration set-up will take. As for the ongoing negotiations, there is still no
breakthrough with only about a week to go to the ‘final’ deadline.


USD-JPY hit four-session lows of 104.57 at late-morning, down from 104.91 at the open,
and overnight highs of 105.15. Narrow ranges have been the case on Friday for most
Dollar pairings, with the Greenback overall under modest pressure given the risk-on
backdrop. The pairing has traded under its 20-day moving average at 104.72, which may
attract some short-covering related buying into the London close and the weekend.



USD-CAD bounced from London lows of 1.3117 to 1.3148 at the open. The pairing had
peaked at 1.3170 during the Asian session and later topped at 1.3173 in light afternoon
dealings.. Softer oil prices limited USD-CAD downside, as WTI headed to within 15 cents
of the key $40 mark. Risk-on conditions and a subsequently lower USD overall have
capped USD-CAD gains, and a combination of the two could keep USD-CAD
rangebound into the weekend.