FXE

The initial estimate of eurozone GDP growth in Q3 far surpassed expectations.But renewed COVID-19 restrictions point to a sizeable GDP decline in Q4.Whether the eurozone can avoid another technical recession is uncertain at this point.Either way, the road back to pre-pandemic output levels will be a long one.

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.

After experiencing a strong rally since March, momentum on EURUSD has halted in the past two months. However, the recent positive news on Pfizer Covid19 vaccine could generate a ST rally in risky assets and weigh on the USD. We expect the euro to break its 1.20 resistance in the near term against the greenback. However, the upside gains remain limited (at around 1.25) as ECB is not ready to accept a constant euro appreciation.

EUR/GBP has been moving higher, albeit slowly, over the past few months.Further upside can probably be expected, considering that the U.K. faces heightened uncertainty post year-end, after its trade deal deadline passes.The U.K. may be able to formalize a trade deal with the EU in time; however, this is unlikely to change GBP sentiment considerably.The service-led economy of the U.K. has recently been plunged back into another month-long national lockdown (to fight COVID-19).Meanwhile, EUR still appears undervalued (as implied by PPP modeling), with our 0.96 target still in sight. Provided inflation remains higher in the U.K., the fair value number for 2020 is also likely to have risen further.

Turkish equities have not moved much in 2020, however they have collapsed in international FX terms.USD/TRY and EUR/TRY continue to appreciate. Indeed, all G10 currencies have appreciated against the lira between 40 and 60% this year.Nevertheless, while consumer confidence remains low in Turkey, it might have bottomed out, while broader economic confidence has improved.With a return of domestic confidence, there is a chance that the weaker lira will begin to support the Turkish current account and real growth.Longer term, we may see a return of foreign investment into the country. While local inflation is high, G10 currencies have strengthened against the lira by far more in percentage terms. With some lira stabilization, TUR may present an interesting contrarian-long opportunity.

Quant giant Dimensional Fund Advisors is cutting management costs on more than a third of its mutual-fund offerings.

In the final countdown before the U.S. presidential election, exchange-traded fund investors are pulling out of junk bonds.