USD - United States Dollar
Johnson & Johnson halted a COVID-19 vaccine trial after a volunteer reported an adverse event, and the stock markets ended a run. Demand for the US dollar increased on the news.
We’ve witnessed market sentiment change with vaccine news and the J&J news is no exception. J&J announced that an unexplained illness occurred. They could not comment if the patient had received the placebo or the vaccine. J&J is in phase 3, testing the safety and efficacy of their treatment.
Meanwhile in Washington DC, Judge Amy Coney Barrett began answering direct questions from the Senate Judiciary Committee. Coney Barrett’s responses could incite further tensions between Democrats and Republicans. And as if they had enough to talk about, discussions on a stimulus package have faded into the background for now.
Prime Minister Boris Johnson said that the time left to get a post Brexit trade deal in place is in “short supply” and he is ready to walk away if there is no agreement with the European Union by Thursday. Fishing rights and state aid are the two remaining issues. The EU wants the UK to follow its state aid rules and to give their fishing fleets full access to UK waters. Downing Street has said that they are trying to “bridge” disagreement over these two areas, however, if both sides do not come to an agreement, they will either have to extend the October 15 deadline or settle for a “no deal” and do business under World Trade Organization (WTO) rules. Both scenarios will lead to further uncertainty and could see both GBP and the Euro falling against their major counterparts.
The Australian dollar failed to maintain the momentum enjoyed into the close last week, edging lower through trade on Monday despite a largely positive risk narrative and an uptick in equities and risk assets. The Australian dollar failed to follow stocks higher as the ASX, S&P500 and Nasdaq all enjoyed strong gains, instead intervention from the Peoples Bank of China to correct the recent Yuan appreciation spilled over into AUD demand forcing the Aussie dollar back toward 0.72 US cents. The PBoC removed minimum cash requirement regulations on Forwards at the weekend while marking the daily reference rate 1% lower than Friday’s fix. Often seen as a proxy to the Yuan the AUD was forced lower giving up 0.7235 to touch intraday lows at 0.7204. With little of note on the domestic docket today, attentions turn to Thursday’s employment report. Unemployment is expected to push beyond 7% despite the efforts of Jobkeeper Payment program. A poor print will likely add mounting pressure on a November RBA rate cut.
1.174 - 1.181 ▲GBP/USD:
1.296 - 1.307 ▲AUD/USD:
0.715 - 0.721 ▲USD/CAD:
1.310 - 1.314 ▲