• Markets were very volatile during the week, with investors focused on how U.S.-China trade talks and Brexit negotiations evolve. Market volatility (VIX) hit levels above 20 but retreated to 16 as optimism about a potential trade deal rose towards the end of the week. Increased prospects of a limited U.S.-China trade deal underpinned the risk-on mood, with equity indices rallying, led by cyclicals, while safe-haven assets declined.
  • Despite the trade talks and higher chances of a Brexit deal, risky assets got an additional boost from upbeat economic data today. The US. Michigan consumer confidence index surprisingly recovered in September (96, consensus 92, previous 93.2), suggesting that consumption spending positive momentum remains.
  • Sovereign bonds yields soared, recovering from last week’s sharp declines (10Y US +22bps, 10Y GER +15bps). Markets expectations of a 25bp Fed rate cut in October moderated to 65%, while those of an additional cut by year end fell to 25%, down from 65% last Friday. Part of the upward pressure on European yields stemmed from the ECB minutes and press reports confirming the division emerging within the ECB board, particularly on QE. Market expectations of a further ECB rate cut moderated but still remains high (70% probability of 10 bps cut in 2H20). Risk premia fell below 70bps in both Spain (to 67bps) and Portugal (to 64bps), with the latter declining below Spain’s after the election results. Meanwhile Italy’s risk premium remains broadly unchanged around 140 bps, ahead of the deadline to present the 2020 budget.
  • Positive trade deal prospects weighed on safe-haven currencies (DXY index -0.5%, USDJPY -1.5%) The GBP appreciated significantly by 2.6% on increasing hopes of a Brexit-deal (see). Nonetheless, the GBPUSD 1M implied volatility inched up, suggesting that uncertainty remains high in the short term, while the 3M implied volatility moderated.
  • Elsewhere, EM currencies were mixed. Idiosyncratic factors weighed on the Turkish lira, which depreciated (USDTRY -2.9% to 5.9) amid increasing geopolitical tensions in the Middle East (Turkey's 5Y CDS +32bps to 396bps). The Brazilian real also fell sharply this week (USDBRL -1.4%) as markets are pricing in another cut of 75bps by year-end.

Download The Full Economic Indicators

En ningún caso BBVA será responsable de las pérdidas, daños o perjuicios de cualquier tipo que surjan por acceder y usar el website, incluyéndose, pero no limitándose, a los producidos en los sistemas informáticos o los provocados por la introducción de virus y/o ataques informáticos. BBVA tampoco será responsable de los daños que pudieran sufrir los usuarios por un uso inadecuado de este website y, en modo alguno, de las caídas, interrupciones, ausencia o defecto en las telecomunicaciones.

Analysis feed

Latest Forex Analysis

Editors’ Picks

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. 

Gold News

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.

Oil News

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.

More info

Forex Majors