Daily Market Commentary 29th October 2020

Markets were in disarray overnight, flung of the cliff by the virus. Cases are surging across Europe and signs of panic are starting to set in, with plans afoot in France and Germany to reinstate a lock-down. This was to be avoided at all cost, after the extensive damage done to global economies, during the first wave. The orthodox approach prior to the pandemic was to avoid lock-downs and mange the virus, while keeping the economy and wider society, open. The nature of the virus, pushed panic buttons and most countries reacted in the extreme. France and Germany are fast approaching that tipping point, once again. Equity markets spiraled lower, for the third day this week and for the first time, the currencies responded. The safe haven Dollar spiked upwards, while commodity prices dipped sharply lower.

This, all combined with the looming US Presidential election, was enough to panic markets including the US. The EUR fell back to 1.1750, while the GBP dropped below 1.3000. Brexit trade negotiations are also in their final stages, which also has the ability to move European markets and currencies. The President also confirmed there would be no relief/stimulus package before the election. Markets are in turmoil in this final stages of the election campaign. Commodity currencies felt the pain, with the AUD plunging to 0.7050, while the NZD fell back to 0.6650.

The virus and the impact on the economy will continue to drive markets, while the Presidential elections next Tuesday, will ensure volatility.