Market Commentary – October 01, 2020

Kevin Jock

1st October 2020

The U.S. dollar fluctuated against most currencies on Wednesday, as the market had hope for another economic stimulus plan, which improved risk sentiment. The plan may help alleviate the economic shock caused by the recession caused by the coronavirus epidemic.

Overall, the U.S. dollar has experienced its worst quarter since September 2017, falling by about 3.5%. Investors expected the economy to recover rapidly after the coronavirus epidemic. This prompted investors to withdraw from safe-haven assets and buy riskier High currency.

The U.S. dollar fell against the Japanese yen and weakened against higher-risk currencies such as the Australian dollar, New Zealand dollar and Canadian dollar.


Figure 1 (Source: IS Prime): USDJPY 1-Year Chart

The Speaker of the US House of Representatives Pelosi and Treasury Secretary Mnuchin met on Wednesday to try to reach an agreement on the coronavirus rescue bill before the November 3 general election.


Headliner to Review

  • U.S. economic data also largely supports the dollar. The economic figures were better than expectations.
  • The National Employment Report released by ADP on Wednesday showed that private employment in the United States increased from 481,000 August to 749,000 in September.
  • However, another data showed that the annual rate of gross domestic product (GDP) in the United States in the second quarter fell by 31.4%, the largest drop since the government began recording the data since 1947.
  • Chicago PMI surged in September to the highest level since the end of 2018, jumping from 51.2 to 62.4. Pending Home Sales m/mi increased from 5.9% to 8.8%.

Headliner to Watch

  • The manufacturing PMIs in Canada, Span, French, German, Italy and UK will be released.

  • The unemployment rate in Europe expected to increase from 7.9% to 8.1%.

  • ISM Manufacturing PMI in the US expected to remain unchanged. US Unemployment Claims expected to change from +870k to +850k. Personal Spending m/m expected to decrease from 1.9% to 0.7%. Core PCE Price Index m/m expected to keep unchanged at 0.3%.

  • US politics and Brexit would be the key drivers on the day.

Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice.

Antony Tan
Ben Li
Kevin Jock