• Market risk appetite improved, although volatility remains ahead of the trade talks conclusion. There has been confusing news-flow since yesterday, with China offering to buy more U.S. agricultural goods if the U.S. refuses to hike tariffs, while the U.S. might include some commitment in terms of the exchange rate in the deal. Separately, U.S. President Trump said he will meet China Vice Premier Liu He tomorrow.
  • On the data front, U.S. core CPI undershot estimates in September (0.1% MoM, consensus 0.2% MoM, previous 0.3% MoM). Meanwhile, U.S. employment showed some resilience as its jobless claims fell more than expected. In Europe, French industrial production fell unexpectedly in August (-0.9% MoM, consensus 0.3% MoM, previous 0.3% MoM), alongside British industrial production (-0.6% MoM, consensus 0.1% MoM, previous 0.1% MoM).
  • Both the Fed and ECB minutes of their September meetings had a mute impact on markets. The Fed’s minutes suggested that only a minority is expecting a further easing, while market expectations of a Fed rate cut by the end of this month hover at around 75%. Moreover, there was a long debate regarding the inflation framework, and certain consensus is building around the adoption of and average inflation target. There was practically no debate regarding the optimal level of bank balance sheet. Yield on sovereign bonds soared on hopes of a limited U.S.-China trade deal, especially the backend yields (both 10Y UST and German bond yields +8bps). UK bonds led the losses with the 10Y yield dropping significantly by 13bps driven by trade and Brexit deal optimism, while peripheral risk premia were flat.
  • he dollar weakened (DXY index -0.4%), while the yuan appreciated against the USD (+0.2%) amid the potential currency pact between the U.S. and China. The JPY underperformed its G10 peers and the euro gained (+0.4%) despite weak industrial production data in the Eurozone. The sterling jumped (+1.4%) on prospects of a deal between the two leaders of the UK and Ireland. Elsewhere, EM currencies benefited from a better market risk appetite with the TRY leading the gains (+0.8%) In commodities, gold prices declined (-0.7%), whereas oil prices extended yesterday’s gains (Brent +0.7%), despite US crude oil inventories declined less than expected last week.
  • Global equities recovered from recent losses (both S&P 500 and EuroStoxx 50 +0.9%), especially cyclical sectors with the banking sector rising 2.5% on average.

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EUR/USD clings to 3.5-week’s high, trades above 1.1000 figure

The pair is challenging the 1.1047 resistance. EUR/USD bull recovery from 34-month lows remains intact. Further coronavirus headlines are awaited.


GBP/USD hits new 2020 low and bounces amid Brexit rhetoric, coronavirus headlines

GBP/USD is trading above 1.2800 after hitting a new 2020, nearing the 1.2700 figure, as concerns about a no-trade-deal Brexit are weighing on the pound. Modest recovery seen in USD during the American session keeps the bearish pressure intact.


XAU/USD tumbles near two-week’s lows, sub-$1600/oz

Gold has been dropping sharply this Friday while reaching the 200 SMA on the four-hour chart. XAU/USD bulls gave up as sellers took the market down sharply. The bears seem to be in charge and more down could potentially be expected. 

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WTI remains under pressure around $45.00

Nothing new around crude oil prices, with rising concerns on the Chinese COVID-19 and its potential impact on the economy and the demand for the commodity keeping traders’ sentiment well depressed.

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FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

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