FXA

Fifteen countries that make up nearly a third of the world's population and gross domestic product have formed the world's largest trading bloc.The Regional Comprehensive Economic Partnership, or RCEP, was

The consequences of the U.S. presidential election and positive news on a Covid-19 vaccine/treatment are being felt not just in stocks and bonds, but in the world's currency markets.The U.S.

The dollar is consolidating yesterday's losses.Equities are lower, and benchmark yields are little changed.The S&P 500 is trading a little lower following yesterday's 0.2% decline.Gold rose almost 1% yesterday, the most in a couple of weeks, on the back of the weaker dollar.WTI for December delivery slumped 4% yesterday and slipped below the $40-mark and straddled today.

EUR/AUD moved significantly higher in February and March 2020, on the back of largely mechanical moves, as capital was repatriated.More recently, the pair has been trading between circa 1.60 and 1.66, although most recently EUR appears to be breaking out versus AUD.While the real yield for EUR/AUD has technically worsened this year, I believe longer-term forces will favor lower EUR inflation and higher AUD inflation.Meanwhile, rates are likely to remain constant, although higher AUD inflation could even beget higher interest rates in Australia.As sentiment seems to have shifted this year in favor of the EUR, it appears that there is potential for a self-reinforcing move higher.

The USD has not responded to the rise in VIX in recent days, which has intrigued a lot of traders who have been buying the greenback as a hedge.The US dollar has been negatively correlated to equities in the past 2 years (especially in 2020); hence, lower equities should coincide with a rising dollar.We do remain bearish on the British pound as we still think that it is the most vulnerable currency in the current environment.

The dollar is falling against most of the world's currencies today.Sterling and the Norwegian krone are leading the majors higher.The Chinese yuan extended its gains and is now at the best level since July 2018.In Asia, most of the large markets gained, but China, India, and a handful of smaller bourses were sold.Europe's Dow Jones Stoxx 600 is off for the third day and the sixth session in the past seven.

As global markets have entered into territory that is truly uncharted, historical increases in economic uncertainty have helped safe haven currencies outperform.But while the Invesco CurrencyShares Australian Dollar Trust ETF has gained by more than 25% since March 18th, 2020, the fund has seen pullbacks from the 73.84 highs.Ultimately, this might be creating a new buying opportunity if comparative strength in economics fundamentals starts to work as a precursor to new FXA highs into 2021.

China's economy expanded by 2.7% in Q3, a little below the Bloomberg survey median forecast of 3.3%, and Q2 growth was revised to 11.7% from 11.5%.The UK has been struck by a resurging virus, the lack of progress with EU trade talks, and the pre-weekend downgrade by Moody's.In an otherwise light calendar today, six Fed officials speak. These include Chair Powell at an IMF-sponsored discussion of cross-border payments and Vice-Chair Clarida on the economic outlook.Oil prices have recovered from their April lows but have been moving broadly sideways for three-four months.