Lack of progress on stimulus and tightening of Covid rules globally have added to US election concerns. China's central bank added medium-term funding to the financial system to guide the economy through the pandemic.
But this has to be the least enjoyable trading environment even if you are on the right side of the coin when forced to wade through a deluge of Covid headlines.
Still, there is a whole mash of reasons to pull away from your screens for a bit as the markets de-gross ahead of an expected choppy period in terms of headline risk, including Brexit, Covid, US election, and fiscal stimulus trepidations.
Today's EU Summit looks unlikely to result in more than a willingness to continue negotiations (according to the communique). A press conference will be held following the working dinner, where Brexit will be the crucial topic.
UK PM Johnson yesterday noted in a call to European Commission President von der Leyen that he was "disappointed" with progress so far and would "reflect" on further action following the summit outcome. It looks highly likely that the two sides will continue to negotiate at least until the end of this month.
My take away for what its worth, as I've been far more times wrong than right since 2016, the past few days has been positive, as the UK seems willing to compromise on state aid, in which case most likely the EU will do the same on fishing.
Currencies
Rate-cut pricing in Australia is being pulled back into the November meeting following a dovish speech by RBA Governor Lowe. Investors started to push out the expectations, but the address has reversed all of those moves.
The single currency is having a tough go of it with new Covid cases in Europe rising dramatically and in some core countries at record highs the last few days. I am sure it is just a matter of time until this will feed into economic data, and the market will then be leaning on more government handouts for support.
USD/CNH is a trading bid at 6.7020-7220. Swaps went lower as the People's Bank of China injected more MLF and China inflation data missed consensus expectations. Funding has eased to 4 pips a day from 8 pips at the open. Forward/forwards are relatively supported as rates yields rebounded after the initial reaction.
After getting their hand caught in the cookie jar earlier in the week, I honestly do not sense FX traders have a big ax to grind ahead of the plenary.
Gold
I suspect memories of 2013 could be weighing on the gold sentiment, which was one of the worst years for gold in recent times and was characterized by bear steepening in real yields. Right now, the common-sense view is that a democratic sweep and ensuing stimulus deluge will drive bear steepeners, while the inflationary impact will push term premium higher.
But if the Fed comes through with AIT anchoring rates, it could still benefit gold, but the trade is much less straightforward than buying the dips as for gold to take flight, it depends on the FOMC honoring that AIT commitment While $2000 is still there on the viewfinder, I'm just unsure how much there is beyond that level in 2021