October 1: Overnight Market Wrap

October 1: Overnight Market Wrap

Key Points:

US stocks close higher after post debate sell off

USD weakest for a week as month end selling weighs

Mnuchin & Pelosi still unable to agree on stimulus package

After an extremely choppy day all major US indices closed up for the day but down for the month, the worst September showing since 2011. Likewise the USD slid lower as month end selling gathered pace pushing the DXY back to 93.85. The US presidential debate came and went with most analysts predicting the biggest loser to be the USA. Neither participant did enough to sway voters but Trump’s aggressive and interruptive approach seemed to grab most of the headlines. Post-debate, US stock futures slipped and the USD rallied throughout the rest of the Asian session and for most of the European session, despite better Chinese PMI data. However, things turned back the other way mid-morning in Europe and risk gathered pace alongside the constant USD selling. Once again CAD, AUD and NZD in that order were the biggest winners and the EUR and CHF the biggest losers. EUR unable to break through 1.1750/60 on two attempts closed back lower at 1.1730 whilst most other currencies have held their gains vs the USD. Gold also endured a choppy session ranging between 1881 and 1902 and Oil closed higher after the previous days losses. Fed’s Bullard commented that he is bullish on the economy yet at the same time the US cannot wait until 2021 for further fiscal stimulus. Sounds like a contradiction to me but his speech wasn’t a market mover. What was a market mover was the news that Mnuchin and Pelosi once again met and once again couldn’t agree, so the to and fro around this fiscal stimulus still has no end in sight despite both sides stating they want a resolution before the election. The ADP print came out better at 749K but this data has been so far out from the NFP that it was largely ignored. In Asia today China will observe two days public holiday and we will get PMI data from Japan and Europe ahead of the US weekly jobless claims and ISM and Canadian PMI data. Highly likely that we may endure a volatile day for markets but we will have to wait for Europe to get the ball rolling.

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