Forex Today: Trump contracts COVID-19, risk-off mood ahead of Non-Farm Payrolls

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Here is what you need to know on Friday, October 2:

President Donald Trump has tested positive for coronavirus, triggering a high dose of uncertainty and a risk-off mood weighing on stocks while boosting the safe-haven dollar and yen. Non-Farm Payrolls are set to show a slower restoration of jobs and will have a hard time competing with the bombshell news about the president. 

The president and his wife Melania tested positive for COVID-19 after adviser Hope Hicks also got the same result. The septuagenarian leader is doing well and will continue conducting his business from isolation in the White House.

High uncertainty about the fate of the next fiscal stimulus package and the elections is weighing heavily on markets, sending S&P 500 futures more than 1.5% down at the time of writing. Oil prices are taking a substantial hit.

Republicans and Democrats ended Thursday without an agreement on a deal on fresh relief despite reported progress. Markets reacted sharply to headlines about talks on Capitol Hill last week. 

The safe-haven dollar and yen are on the rise while gold seems to be breaking its correlation with stocks and rising. 

See Trump’s coronavirus adds uncertainty in three ways, stocks have more room to fall

The shocking news steals the focus from September’s Non-Farm Payrolls figures, the last such publication ahead of the elections. The US is projected to report an increase of 850,000 jobs and a drop in the unemployment rate to 8.2%. That would be a slower pace of restoration, yet still a substantial increase in absolute terms. 

See

  • Nonfarm Payrolls Preview: Eagerly waiting for an upbeat report
  • US Employment Situation Report September Preview: A challenge to define normality

Brexit talks yielded no breakthrough over state aid and other topics, failing to fulfill optimism seen earlier in the week. Moreover, the EU took legal action against the UK in response to the Internal Markets Bill which knowingly violates the Brexit Withdrawal Agreement. The pound is on the back foot due to recent adverse developments and concerns about further COVID-19 restrictions in Britain.

Concerns about eurozone coronavirus cases remain prevalent, with Spain and France leading the charge. The common currency could suffer as preliminary inflation figures for September are forecast to show ongoing weak inflation, with the Core Consumer Price Index barely rising from 0.4% to 0.5%. 

Cryptocurrencies have fallen, with Bitcoin trading below $10,500 and other digital coins following its path. 

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