Forex Today: Dollar retreats amid fresh stimulus hopes, some upside in China's GDP

Here is what you need to know on Monday, October 19:

Markets are cautiously optimistic and the US dollar is edging lower amid fresh hopes that the US agrees on a stimulus deal before the elections. Chinese Q3 GDP missed estimates but includes several positives. Concerns about eurozone coronavirus cases and Brexit talks is weighing on sentiment. 

Fiscal stimulus: US President Donald Trump has said that he is willing to go for a larger stimulus deal than Speaker of the House Nancy Pelosi's $2.2 trillion package ahead of the elections. He would have to convince hawks among Senate Republicans to back a large relief package.

US Retail Sales beat estimates with a leap of 1.9% in September, showing the resilience of the economy and potentially reducing the need for additional support from the government. Pelosi set Tuesday as a deadline to conclude talks while Senate Republicans are focused on the Supreme Court nomination.

US elections: Challenger Joe Biden continues leading Trump in national and state polls, with forecasts pointing to around 90% chance of winning according to FiveThirtyEight and The Economist. The race for the Senate is significantly closer, with only a 74% probability for the Democrats according to these websites. 

See 2020 Elections: Seven reasons why this is not 2016, time to focus on the Senate

Jerome Powell, Chairman of the Federal Reserve, will speak later on Monday in a panel about digital currencies. 

China reported its economy grew by 4.9% annualized in the third quarter of 2020, worse than expected. However, the Gross Domestic Product was hobbled by an increase in imports, which is a sign of growing consumption in the world's second-largest economy. 

The Chinese economy depends on demand from other places, and Europe's surge in COVID-19 cases may reduce growth. Italy, which was initially spared from the second wave, imposed new restrictions, joining other countries. France, Spain, the Netherlands, and Belgium are hard-hit in the eurozone, but also Germany is struggling.

EUR/USD is trading around 1.17, at the bottom of the recent range. Christine Lagarde, President of the European Central Bank, said that the recovery risks going momentum amid new restrictions and that her institution has not exhausted its toolbox. She is set to speak again later. 

Gold is on the rise, trading above the $1,900 level it has been battling in recent weeks. 

Brexit: Prime Minister Boris Johnson said that the UK should prepare for a no-trade-deal Brexit in January after expressing disappointment from the EU decision not to intensify talks nor make sufficient concessions, according to London.

On the other hand, Bloomberg reports that the UK could water down the controversial Internal Markets Bill, potentially paving the way for a breakthrough. Moreover, Michel Barnier, the EU Chief Negotiator, canceled his planned visit to London but will hold a telephone call with his British counterparts. 

The UK is also struggling with an increase in coronavirus cases which have caused tensions between the central government and cities in northern England. Moreover, Moody's downgraded the country's credit rating. 

NZD/USD is on the rise following Prime Minister Jacinda Ardern's impressive victory in New Zealand's general elections. Her Labour Party won an absolute majority after successfully encountering the virus. 

Cryptocurrencies are consolidating recent advances, with Bitcoin trading above $11,400.

More Big move coming in EUR/USD? Fiscal stimulus and coronavirus are the keys