Francesco Pesole, FX Strategist at ING, notes that markets appear to be stabilising today as concerns about another record increase in US Covid-19 cases is being mitigated by hopes of new rounds of stimulus.

"Texas and Florida continue to attract most of the attention as the two states are halting their re-opening plans. It remains to be seen whether any state will ultimately move to re-establish full-lockdown orders: the developments over the weekend will tell us more and will be the key in determining the direction of global sentiment next week."

"While waiting for such clarity, markets are likely factoring in the notion that cases are on the rise again and may show somewhat lower sensitivity to the contagion numbers today. Yesterday’s release of the Fed’s stress test results was mixed: while US banks performed quite well, the Fed is imposing caps on dividends and share buybacks in 3Q on the back of lingering uncertainty around the pandemic impact. The impact on sentiment has been limited and stock index futures show a relatively upbeat mood today."

"Accordingly, the dollar’s upside potential may remain somewhat limited today amid some generalised stabilisation in G10 FX – also due to the lack of market-moving data - although some month-end and quarter-end flows may generate some volatility throughout the day."