The US dollar and the Japanese yen were the strongest currencies on the Forex market during the last week of October, rallying on the back of risk aversion. The euro was among the weakest.
The main theme at the end of the month was the US presidential election at the start of November. With no clear winner and with uncertainty about how the outcome will change the US political landscape, investors were nervous and preferred to stick to safer assets. The second wave of the COVID-19 pandemic was another reason to worry. And the fact that the US politicians failed to agree on a coronavirus relief package before the election was not helping either. With plenty of reasons to worry, it was not a surprise that traders preferred to buy the greenback and the yen. What was surprising was the fact that the Swiss franc, another currency perceived to be safe, failed to join the rally.
Meanwhile, the euro languished as the European Central Bank signaled that it is planning to add to stimulus next month. The increasing number of coronavirus cases and the return of lockdown measures across Europe was another reason for the currency’s weakness. The lockdown threatens to derail the already fragile economic recovery.
EUR/USD tumbled from 1.1855 to 1.1646. GBP/USD dropped from 1.3053 to 1.2950. USD/JPY ended the week flat at 104.67.
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