October 21: Overnight Market Wrap

October 21: Overnight Market Wrap

Key Points:

Pelosi extends stimulus deal deadline with talks set to continue

USD ends lower on the day, DXY back at 93.00

RBA’s dovish stance sends AUD lower towards 0.70c

Yet again the main market volatility revolved around will they, wont they come to an agreement on the US fiscal stimulus deal. Comments from either side left markets disappointed however talks are due to continue on Wednesday between Mnuchin and Pelosi so there’s still a glimmer of hope. Early optimism saw stocks move higher on the open but towards the end of the session the rally had reversed back however all major indices posted minor gains. In FX the big story was the EUR rally from 1.1760 almost one way traffic to 1.1840 before a late drift back to settle at 1.1820 and the decline of AUD after RBA minutes saw the currency slip back to an intraday low of 0.7020. RBA’s Kent also reiterated Lowe’s dovish comments from last week adding to the pain with a cut on 3rd November now fully expected. The S&P rally saw AUD dragged back to 0.7070 during the session but settled back at 0.7050. EUR/AUD one of the biggest movers on the day. GBP remained jumpy on Brexit and Covid lockdown fears but held 1.2950 into the close despite a record new 21,331 cases over the past 24 hours. Gold closed at $1910 and WTI regained $41 giving the CAD some support on the day. Overall the USD ended the day lower with the DXY back at the key support lows from last week around 92.90/00. For the Asian session ahead today we get a look at preliminary retail sales from Australia for September and during the European session a look at UK inflation and more from ECB’s Lagarde. The US session tonight will be highlighted by the Fed’s Beige Book and Canadian retail sales and inflation data.

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