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Currencies are little changed overnight vs. yesterday’s close. The dollar is mixed against the G10 pairs with a slight edge to dollar weakness. The primary gains vs. the USD are seen in the AUD (+0.55%) and NZD (+0.48%). The EUR is +0.08%, CHF +0.04%, and CAD +0.02%. The dollar’s gains are against the JPY (+0.11%) and GBP (+0.10%). With the tight ranges it is no surprise to see the DXY (dollar index) -0.01% for the day.

Dollar weakness is being fueled by an increasing appetite for risk assets in the wake of recent COVID-19 vaccine breakthroughs and the increasing likelihood of an orderly transition to a new U.S. Presidential administration. President Trump tweeted overnight that he had instructed his team to begin transition ‘initial protocols’.

Equities are higher, seemingly finding almost any news headline as a reason to ‘bounce’. The major equity indices have recouped the losses from March and are net positive YTD: DJI +4.81%, SPX +11.45%, and NDX +32.69%.

Crude oil prices continue to climb, +2.74% today and +31.51% from the November low. Gold is -1.86% and silver -1.74%.

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Another promising COVID-19 vaccine was announced today, this time by AstraZeneca/University of Oxford. This is the third potential vaccine to be announced in as many weeks, once again fueling risk appetite at the expense of the U.S. dollar. Putting the market impact aside, one can imagine the immense pressure on AstraZeneca to put forth a vaccine candidate, any candidate, following the Pfizer/BioNTech and Moderna vaccine results released over the previous two weeks. The hunt for a viable vaccine has become a high stakes pursuit with billions of dollars in guaranteed government orders as incentive.

The dollar is lower against its G10 counterparts with the biggest decline vs. the GBP at -0.78%. The pound has rallied on reports of a possible meeting between PM Johnson and EC President von der Leyen later this week in an effort to keep the Brexit trade deal conversation going. The pound is trading at a multi-week high, just below 1.3400 resistance.

Today’s gains vs. the USD:

NZD                     +0.39%

CHF                     +0.35%

EUR, DKK             +0.31%

SEK                       +0.25%

CAD, AUD           +0.22%

NOK, JPY             +0.11%

The USD/MXN traded to a fresh daily/week/monthly low today at 19.9360, briefly trading below key support at 20.0000.

Economic releases this week include tomorrow’s House Price Index and Consumer Confidence. Jobless Claims will be released on Wednesday instead of the usual Thursday due to the Thanksgiving holiday.

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The dollar is set to close lower for the week. Encouraging COVID-19 vaccine news from earlier in the week continues to outweigh a wave of new virus cases and is driving flows away from the safety of the dollar into equities. The major U.S. equity indices have gained an average of 1.44% (before today’s open).

This week’s gains vs. the USD:

BRL         +2.50%

NOK       +1.94%

NZD       +1.40%

MXN      +1.31%

ZAR        +0.93%

SEK         +0.87%

JPY         +0.77%

CAD       +0.64%

GBP       +0.61%

AUD       +0.52%

EUR        +0.25%

CHF        +0.19%

Ongoing dollar weakness has driven several currency pairs to key support/resistance levels. USD/CAD traded to a low of 1.2924 this week, just above key support at 1.2900. The story is the same for USD/MXN which is hovering just above key support at 20.0000 after touching a weekly low of 20.0690. Progress for the EUR/USD was halted at 1.1900 resistance once again, its 14^th attempt at that level over the last 17 weeks. More dollar weakness could force the dollar out of its recent weekly ranges and usher in new lows for the year.

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Another Monday and another announcement of a second effective Covid-19 vaccine, this time by Moderna. The Moderna vaccine was 94.5% effective in early trials which favorably compares to Pfizer’s >90% reported effectiveness. Global equity markets are higher following the announcement with the major Asian and European indexes up an average of 2%. U.S. equity futures are signaling a strong open.

The dollar is lower in the wake of today’s vaccine news in a near replay of last Monday’s vaccine-related dollar weakness. The NOK and BRL have gained over 1% vs. the dollar and the ZAR, MXN, TWD, KRW, and NZD all gaining more than 0.50%. One notable departure (compared to last Monday) is seen in the USDJPY which is lower by 0.05% today compared to last Monday’s +1.96% gain.

USD/CAD is lower by 0.32% and targeting support at 1.3050. USD/MXN is down 0.35% after finding support at 20.1400, with major support near 20.0150.

The EUR/USD gained as much as 0.30% in early trading to reach a high of 1.1868 but is now down 0.05%. The AUD/USD is higher by 0.36%, and bumping against recent resistance at 0.7300.

The Empire Manufacturing Index was released today at 6.3, well below the 13.5 estimate.

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A surge in COVID-19 cases in the U.S. has dampened enthusiasm for risk assets today. New cases in the U.S. topped 144,000, a daily record, outpacing yesterday’s 142,856 reported new cases.

The dollar is mostly higher vs. the major currencies and the U.S. Dollar Index has now regained about 50% of last weeks losses. Today’s dollar gains are concentrated against the NOK (+1.13%), MXN (+1.04%), GBP (+0.79%), and CAD (+0.68%).

The USD/CAD has spent much of the week below key support at 1.3050 and even touched a multi-year low of 1.2924 on Monday. But today’s U.S. dollar surge has lifted the pair above 1.3050 to reach a high of 1.3139. It appears likely now that the USD/CAD will close above 1.3050 for the week, so the weekly technical outlook remains rangebound between 1.3050 and resistance at 1.3400. Long-term support remains intact at 1.2900.

USD/MXN is now unchanged for the week after being down 1.29% at Monday’s close. Major support is at 20.0000. The 100-day moving average, currently at 20.6976, is preventing additional dollar gains.

CPI data released today came in below expectations as inflation remains elusive. Weekly Jobless claims were reported a at 709k, better than the 731k estimate.

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The dollar is sharply lower today as the shift to adding portfolio risk has accelerated. Biden pulling ahead in ongoing vote counting in key states and news of a promising (90% effective) COVID-19 vaccine from Pfizer have added momentum to the risk on trend started last week.

The dollar’s primary losses are concentrated against emerging market and oil-dependent currencies: -1.94% vs. ZAR, -1.86% vs. NOK, -1.85% vs. MXN, -1.79% vs. BRL, -0.87% vs. AUD, -0.86% vs. NZD, and -0.78% vs. CAD.

The dollar’s only gains are against the safe-haven CHF (+0.78%) and JPY (+1.61%).

Equities are the major avenue for adding risk as the major European equity indices are up an average of 5.58% and oil is higher by 10.07% on an anticipated economic turnaround. Gold is lower by 4.31% and silver is down 5.66%.

USD/CAD broke through support at 1.3000 and briefly fell below long-term support at 1.2950 to touch a daily low of 1.2924. Support at 1.2900 is now within reach and 1.2795 (low from October 2018) the next major support.

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As expected, the currency markets had a volatile election-driven session overnight. The dollar gained early on news of Trump winning the Florida vote, a surprise for most that hinted at possible victories in other key states. But as the night wore on Biden’s electoral vote count steadily increased, leading the dollar to retrace all its early gains.

USD/MXN saw the most volatility with a range of 4.86% between the high and low overnight but is now only -0.09% vs. yesterday’s close. AUD/USD had a high/low range of 2.40% and is -0.40% currently. Other key ranges/results: EUR/USD, 1.42%, -0.10% currently; GBP/USD: 1.71%, -0.73% currently; USD/JPY: 1.13%, +0.01% currently.

Elections and the dollar’s outlook aside, volatile trading is informative in that it does a good job of identifying support and resistance levels. The USD/CAD traded to major resistance at 1.3300 and support at 1.3100, confirming the viability of those levels. Similarly, the USD/MXN approached major resistance at 22.0000 and support approaching 20.8000. And trading in AUD/USD confirmed significant resistance at 0.7225 and support at 0.7050.

Tomorrow the FOMC will announce its rate decision at 2PM ET, and Nonfarm Payrolls is set for release on Friday.

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The dollar is off to a mixed start for November with the Dollar Index (DXY) currently unchanged from Friday’s close at 94.038. The dollar had been up as much as 0.26% early in the European session where it encountered resistance at the 100-day moving average.

North American currencies are leading both the gains and losses among the majors today in a rarely seen divergence. The Canadian dollar is leading the gains vs. the USD at +0.42%. Resistance at 1.3325 (100-day moving average) was tested over the last four trading days and prevented further gains for the USD. Support for the USD/CAD now coming into view at 1.3230 and lower at 1.3175.

The Mexican peso is leading the losses among the major pairs with a decline of 0.57% vs. the USD. On Friday the peso had rallied +0.87% vs. the USD, creating some room for profit-taking today. Resistance is at 21.5000 and short-term support at 21.0300.

The EUR/USD is in its 6^th consecutive daily decline, down 1.90% over that period and lower by 0.13% today. Support at 1.1630 is holding for now, but a daily/weekly break below that will bring 1.1450 into play.

Tomorrow’s U.S. general election will be the key market focus this week and could potentially lead to volatile trading conditions given any controversy/surprises. The FOMC will announce its rate policy decision on Thursday with no change expected. And Friday we will see the monthly Nonfarm Payrolls.

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The dollar is higher today with momentum adding to yesterday’s gains. The Dollar Index (DXY) is higher by 0.85% over two days and up by 1.21% since last Wednesday.

Currencies with economies tied to oil exports have fared the worst as oil prices are lower by another 5.86% today to trade at $35.20, its lowest level since May. USD/CAD has leapfrogged 100-day moving average resistance at 1.3330 and is now on pace to test the 200-day moving average resistance at 1.3400. The CAD has weakened 0.40% today and is lower by 1.91% since last Wednesday. USD/MXN is lower by 0.39% today and down 1.16% over a week.

Weekly Jobless claims were reported today at 751k for the week ending Oct 24^th, better than the 770k estimate and is the lowest weekly total since the outbreak of the COVID-19 pandemic. Quarterly GDP for Q3, also released today, was reported at 33.1%, better than the 32.0% estimate, and completely reverses the Q2 GDP of -31.4%. Today’s report is the highest quarterly GDP on record.