October 2: Overnight Market Wrap

October 2: Overnight Market Wrap

Key Points:

Pelosi and Mnuchin fail to agree on US fiscal stimulus yet again

UK/EU negotiations send Cable on a round trip

Oil down 3.7% on the day

Another choppy session for both stocks and FX but within fairly tight ranges with the exception of GBP. All major US indices closed up on the day for the 5th time in 6 days with the tech sector boosting the Nasdaq 1.42%. The key driver once again was the US fiscal stimulus story which seems to have a daily update of going nowhere with Mnuchin and Pelosi struggling to agree. Data wise we saw the weekly jobless claims a slight beat but still showing almost 12 million people claiming and US ISM weaker than expectations, however neither impacted price. Brexit was the main event once again during the European session with ups and downs around statements and comments from both sides. Cable fell from 1.2950 in Asia to touch 1.2820 before round tripping back to 1.2980 and settling 100 pips lower with day traders struggling to stay in their positions. EUR also jumped around a bit on the back of Brexit but closed mid-range at 1.1740 having failed to break through 1.1770. AUD pushed higher to 0.7210 key resistance before falling back and Gold also tested key resistance at 1910 from 1885 yesterday. With the US election a month way Biden remains ahead in the polls which should give equities a boost and point to a weaker USD as it’s likely a larger stimulus package will get pushed through than if Trump wins. However the next few weeks are likely to be the most volatile time around predicting the election result and expect markets to reflect that. Australian final retail sales for August are due at 1130AEST today after the preliminary showed a strong number last week. China will observe another public holiday and the focus turns to US payrolls and further stimulus expectations tonight.

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