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Economics catching up with third wave

USD - United States Dollar

One day after the US announced a quarter-million COVID-19 related deaths, new jobless claims came in higher than expected.

Forecasted for 707,000 new claims, actual new jobless claims reached 743,000 and the third wave of the coronavirus have caught up with many Americans.

More positive vaccine headlines helped spur risk demand overnight, suppressing USD demand. Pfizer released a more comprehensive review of the results from its phase 3 trial, showing an improvement in the vaccine's overall effectiveness across all demographics. The vaccine is said to work well across a variety of ethnic groups and ages.

Key Movers

President of the European Central Bank Christine Lagarde on Thursday morning indicated the bank will act on Dec 10th. We can expect an expansion of the Pandemic Emergency Purchase Program (PEPP). This is where the ECB buy private and public bonds. The EU has already purchased EUR1.35 billion worth under the plan. They are also expected to expand their Targeted Long-Term Refinancing Operations, or TLTRO, program which are cheap loans to banks. A rate cut is less likely in conjunction with these plans, meaning a small rise in the euro may be imminent.

Sterling performed very well again on Wednesday as rumors suggested a trade deal will be done as early as next week. GBPUSD knocked through the 1.33 handle as traders continue to price a deal into the market. This however was short lived, as the EU have been asked to publish a No Deal Brexit plan, as businesses cannot continue to be left in the dark, in case there isn’t a deal in place. It has been reported that most of the deal has been agreed upon, however officials were yet to agree on state aid and fisheries. GBPUSD is now trading around the 1.32 handle, meaning yesterday’s gains have been eroded.

More positive vaccine headlines helped spur risk demand overnight, propelling the AUD back through 0.73 US cents. The AUD tested resistance at 0.7325 breaking higher to touch 0.7330 before retracing gains and edging lower into this morning’s open. Attentions today turn to domestic labor force numbers with unemployment expected to tick above 7%. With Victoria still entrenched within the lockdown through much of October there is little hope for a surprise uptick as focus turns to December and Q1 2021 as key markers for labor market health.

Expected Ranges

EUR/USD: 1.182 - 1.187 ▲

GBP/USD: 1.320 - 1.329 ▲

AUD/USD: 0.725 - 0.732 ▲

USD/CAD: 1.303 - 1.312 ▼