Pound Struggles Against Dollar Even as China Considers Slowing Purchase of US Bonds

China’s new policy measure helped the current upbeat mood to continue and pushed the US dollar to stay near its two-week lows against major competitors.

Chinese policy action over the weekend is aimed at containing Yuan appreciation, and the mood got a further boost by the central bank’s relaxation for financial institutions regarding the margin to keep aside while purchasing FX for clients through forward contracts.

Today, the markets might trade on lighter volume as the North Americans and Canadians are on holidays on account of Columbus Day and Thanksgiving Day, respectively.

Even after the US stimulus bill discussions going nowhere near a conclusion ahead of the November elections, global equities are moving higher exemplified by the Asian equities rally today on a weakening Yuan, and a moderate uptick in the US stock futures.

The latest 1.8 million dollars proposal from Republicans was rejected by the Democrats batting for a 2.2 trillion dollars stimulus.

Europe is witnessing an increase in the coronavirus cases; Saturday numbers from France showed a jump to record-high daily instances of new patients to 27k. Many regions in Spain are in lockdown as the cases counts are not abating, with further restrictions on the anvil.

The surge in cases has pushed the EUR/USD down by 25-pips during the Asian session, to test 1.1800. But, the fall reversed later, and the pair was trading near 1.1830. The market participants are eyeing ECB President Christine Lagarde’s speech for directional clues in the pair.

Brexit concerns are not in play today as the GBP/USD trades near five-week highs around 1.3051 as an Australian style trade deal is expected if the deadline reaches without an agreement – by October 15. It seems traders are also taking the rising virus cases in the UK without worry as the PM contemplates new lockdown restrictions for tier-3 hotspots. BOE Governor Andrew Bailey’s speech at a virtual Citizens’ Panel Open Forum will be on the radar of the market players.

Gold prices consolidated after last week burst to multi-week highs around 1930 dollars, and bulls await a catalyst to clear 1939 level. WTI oil prices are down by one Percent to 40 dollars as the end of Norwegian strike, US oil restoration and weakening hurricane Delta played out.