October 22: Overnight Market Wrap

October 22: Overnight Market Wrap

Key Points:

US stimulus talks continue but still no agreement

US indices close lower, USD sags

GBP best performer on positive EU comments around continued talks

With less than two weeks to go before the election, the USD has started to weaken once again driving back on gains made in recent weeks with London USD selling fixes impacting. The recent key support at 92.80/00 has fallen to grand effect pushing back below 92.50 at its worst on the day. GBP was the best performer closely followed by NZD and then AUD. Positive EU comments surrounding Brexit talks helped lift the pair firmly through 1.3050/60 recent resistance to a high of 1.3175 and markets have shrugged off the now priced in rate cut from the RBA next month. NZ data continues to perform better showing the effects of a controlled aggressive approach on Covid as the best way to protect the economy. AUD spiked through resistance at 0.7100/10 to a high of 0.7137 and the NZD climbed as high as 0.6678 before both backed off 20 pips into the NY close. The CAD underperformed as retail sales disappointed on the data front and the Fed’s Beige Book showed slight to modest activity in the US with some concerns around NY real estate and a noticeable degree of uncertainty remains. The US session was mainly dominated once again by the fiscal stimulus package. Pelosi is making all the right noises to keep markets hooked in but it’s unlikely anything will be able to pass now before the election with time so short and we heard a continuation of the recent Fed rhetoric from Brainard reiterating fiscal stimulus is required for any recovery. Gold responded well once again adding another $17 to close at $1924 correlated with Bitcoin touching $13,000 for the first time in 2 years after PayPal announced customers will be able to use cryptos for payment. All major US indices closed down on the day with the Russell worst at -0.84%. Recent US election polls have been showing a wide range of readings with some claiming the gap widening and others the gap closing. Nevertheless it’s all about the swing States and markets are bracing for a contested result and ongoing uncertainty. No economic releases to focus on in Asia today as we await RBA’s DeBelle speech at 0930AEST. In the European session Brexit along with BoE speak will garner some focus before the US weekly jobless claims the highlight later tonight.

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