Market Update – October 20
Here’s your overview for Monday, October 20.
Major currency pairs have been relatively stable today following last week’s fluctuations. There’s nothing too significant on the economic calendar today, so investors will likely keep an eye on developments regarding U.S.-China trade relations.
During the Asian trading hours, China released data indicating that its GDP grew 4.8% year-on-year in the third quarter. This follows a 5.2% rise in the previous quarter and aligns with market expectations. Retail sales showed a 3% increase in September, while industrial output rose by 6.5% for the same month. Additionally, the People’s Bank of China has decided to keep the one-year and five-year loan prime rates at 3.00% and 3.50%, respectively, as anticipated.
After declining for three consecutive days, the United States dollar (USD) index closed Friday positively. It seems to be stuck around the 98.50 mark, struggling to gain momentum early this week. In better news, U.S. stock index futures rose between 0.35% to 0.55%, signaling an improved risk appetite. Over the weekend, President Trump expressed hope that China will resume buying soybeans at previous levels and is optimistic about reaching a deal regarding these commodities.
Today’s USD Performance
The current table summarizes how the U.S. dollar (USD) stands against other major currencies. At the moment, the USD is performing strongest against the Japanese yen.
Gold hit a record high of $4,380 on Friday but underwent a sharp correction, falling by over 1.5% later in the day. Nevertheless, it remains up nearly 6% this week, stabilizing around $4,250 as of Monday morning.
The New Zealand dollar/US dollar pair is gradually rising, hovering above 0.5700 early in European trading. Recent data from New Zealand indicates a 1% rise in the consumer price index (CPI) for the third quarter, building on a 0.5% increase the previous quarter. This figure meets forecasts.
GBP/USD has been stable above the 1.3400 mark this morning, having ended nearly unchanged on Friday. The UK Office for National Statistics (ONS) is set to release September’s CPI data on Wednesday.
The Bank of Canada will publish its economic outlook survey later today. After a four-week positive streak, the US dollar/Canadian dollar has remained steady above 1.4000 in early trading.
After falling about 0.3% on Friday, EUR/USD’s three-day winning streak ended, finding itself struggling for direction early on Monday while holding above 1.1650.
On another note, a member of the Bank of Japan’s board, Hajime Takada, commented that Japan is nearing the BOJ’s price target, highlighting a need for action as inflation has remained above 2% for some time. The USD/JPY pair has been stable, comfortably trading above 150.50 this morning.
Risk Sentiment FAQ
In financial language, “risk-on” and “risk-off” describe investors’ willingness to take risks at any given moment. “Risk-on” means optimism, while “risk-off” indicates concern, leading investors to seek safer assets.
Typically, in “risk-on” markets, stock values rise alongside commodities, though gold tends to act differently. Conversely, in “risk-off” times, bonds and safe-haven currencies like the yen and Swiss franc benefit.
Commodities like the Australian, Canadian, and New Zealand dollars often gain during “risk-on” phases owing to their economies’ reliance on exports. In “risk-off” scenarios, currencies such as the USD, JPY, and CHF usually push higher due to their stable nature and investor confidence.
