The Yen and the dollar ended the week with the worst indicators. Despite all concerns about the coronavirus infection of US President Donald Trump, stimulus negotiations have stalled, with major stocks ending the week with strong gains. The yen is also under pressure from a strong rally in Treasury yields.
On the other hand, the loonie has doubled on the back of the rally in oil prices, as well as the strongest employment data. The Australian dollar also performed very well, although the RBA signaled further policy easing, likely in November. The New Zealand dollar has lagged as the RBNZ is actively preparing for a negative rate.
Hopes for a US coronavirus stimulus package led the way at the end of the week. The greenback came under strong selling pressure, ending the week with sharp losses against most major rivals. White House advisor Larry Kudlow said that US President Donald Trump proposed a $1.8 trillion stimulus package that includes checks to individuals and an extension of the Paycheck Protection Program.
The joint development of events was accompanied by a sharp drop in the dollar everywhere, especially on Friday. The rise in yields did not support the dollar. Instead, the return streams of the shelters unfolded in full force. The development of events suggests that the rebound of the dollar index from 91.74 has already ended at 94.74. The next test should be 91.74.
The prospect of a 91.74 breakout for a resumption of the downtrend from 102.99 will largely depend on the overall risk sentiment. We do not expect a clear decision from a trader before the US elections. Therefore, in the short term, 91.74 should remain. However, October can be full of surprises.
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