USD rises after Trump tests positive for Covid-19
The US dollar rose gained as investors reacted to news that Donald Trump and Melania Trump had contracted Covid-19. Meanwhile, global equities fell, with futures tied to the Dow Jones and S&P 500 falling by more than 1.25%. The news came two hours after the president and the first lady went into quarantine. The illness presents a major risk in the market at a time when they are also worried about the rising political temperatures in the US. It also came a few hours after Democrats passed a $2.2 trillion stimulus package in the House of Representative.
The euro declined against the US dollar as the market reacted to weak inflation data from Europe. According to Eurostat, the headline consumer price index rose by 0.2% in September. It dropped by 0.3% on a year-on-year basis. The core CPI, which excludes the volatile food and energy products, rose by 0.2%. These numbers came a day after Christine Lagarde said that the ECB was considering following the Federal Reserve in changing its inflation target. Presently, the bank has set an inflation target of 2.0%. As a result, it tends to increase interest rates when inflation moves above that level.
The market also reacted to the September nonfarm payroll numbers from the United States. According to the Labour Department, the US added more than 900k jobs in September as the country continued to reopen. That was better than the consensus estimates of 840k. Further data revealed that the unemployment rate dropped to 8.2% while the participation rate rose to 61%.
Still, the US has a long way to go to fill more than 20 million jobs that were lost earlier this year. Also, several companies have announced significant layoffs. For example, Disney has announced more than 28,000 layoffs while airlines have warned that more than 32,000 jobs were at risk.
The EUR/USD pair declined today in reaction to the EU inflation, NFP, and news on Trump. The pair is trading at 1.1712, which is below this week’s high of 1.1771. On the four-hour chart, the price is below the 25-day exponential moving average while the Relative Strength Index (RSI) has started to drop. The price is also between 38.2% and 23.6% Fibonacci retracement levels. Therefore, while the pair is likely to continue falling, there is also a possibility of it rising as investors absorb the news.
The GBP/USD pair pared back earlier losses after Boris Johnson announced that he will intervene to end the ongoing impasse. It is trading at 1.2915, which is slightly higher than the intraday low of 1.2845. Interestingly, today’s low was along the support level of the ascending trend line. The price is also being supported by the 25-day moving average. As such, the pair is likely to continue rising as bulls attempt to test the upper side of the channel at 1.3000.
The USD/JPY pair broke out lower as investors rushed to safety. The pair fell to the intraday low of 104.5, which was its lowest level since September 23. As it fell, it moved below the ascending green channel. It is now below the 25-day and 15-day exponential moving average. The price is also below the 23.6% Fibonacci retracement level. Therefore, the pair is likely to rise as bulls attempt to move back to the ascending channel.