September 29: Overnight Market Wrap

September 29: Overnight Market Wrap

Key Points:

US stocks continue recent rebound

Cable bounces back after two weeks of selling

USD weaker across the board as month end rebalancing influences

Risk remained supported to start the week following on from the US stocks markets strong close on Friday. The Dow posted a stellar 400 point gain, the Nasdaq closed up 1.87% and the S&P500 1.61% as financials regained the spotlight despite US yields unchanged on the day. Markets seemed to be buoyed by further stimulus talks but both sides are way apart and a resolution doesn’t look likely soon with the Senate unable to support the Democrats proposals. News that Trump intends to make 150 million virus tests available also created some positive vibes. In FX the USD gave back some recent gains with the commodity currencies the bigger beneficiaries closely following the S&P500 trajectory. AUD has stabilised in 70’s and is pushing back towards 0.7100 after holding above 0.7000 recently as some of last week’s analysts projections of an RBA rate cut next week have been dialled back. With Victoria’s positive response to Covid restrictions it’s likely the central bank will hold fire to see what response comes from reopening. ECB’s Lagarde revealed some discourse amongst members with regard to further stimulus and this contained any rally in the EUR having failed to break back above 1.1695/00 the pair trod water for most of the day. However, it’s ugly cousin GBP benefitted from a more positive approach to Brexit talks squeezing back above 1.29 briefly before falling back to close at 1.2850 on some profit taking and optimism management. Silver gained 3.5% and Gold also benefitted from the weaker USD now back to test 1885 a recent support line that was broken on the way down. Through here opens up a retest of 1905/10 which should provide solid resistance. The upcoming session in Asia is likely to be driven by month end flows with a weaker USD the likelihood, however we will hear from no less than 5 Fed’s speakers throughout the day so we could get a little volatility on any surprise comments. Tonight in the US we have the first presidential debate (Wednesday 1100AEST). While history shows they rarely influence the voters it should make for compelling viewing.

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