Key Points:

US stocks rout, Nasdaq down over 3%

USD strength continues, DXY closes above trendline

Gold drops to 6 week low

Risk aversion returned during the US session after taking a break on Tuesday. The Nasdaq fell over 3%, the S&P500 over 2% and the DJ just under 2% as markets grappled with the realisation that the Fed is not about to add further stimulus and the government are nowhere near resolving the fiscal stimulus package. CNN reporting that Congress is likely to leave this week until after the election. The day had started as Tuesday finished with all indices opening higher but the nervousness crept back in and the selloff gathered pace. Gold spent most of the Asian session hovering either side of 1900 but started heading lower on the European open touching 1973 before a strong $25 bounce, sellers re-emerged and the pair fell to 1855, the lowest for 6 weeks. As with Gold the USD strength impacted the commodity currencies with AUD and NZD hit hardest, in comparison CAD is lagging in its weakness. USD/JPY was a strong performer pushing up from 104.80 to test 105.50 as dollar buying continued throughout the day. Surprisingly GBP and EUR closed weaker but relatively calm in comparison to other pairs, whereas in EM we saw a bloodbath and USD/TRY reach a new all-time high.  The DXY now at 94.50 has firmly broken a trendline to the upside and next resistance would be around 96.00. Political noise centres around the US Supreme Court and Trump’s refusal to accept any negative news over more than 200,000 virus deaths. NZ’s trade balance has just been released in line and later we will get the BOJ minutes as the highlight of the upcoming Asian session, with all Asian indices expected to open in the red. German IFO and weekly US jobless claims will provide the economic data excitement but all eyes will be on the US stock markets and if there’s a further continuation of the current sell off.