Key Points:

Markets quiet ahead of first US presidential debate

USD weaker as month end selling continues, AUD up 1%

Pelosi & Mnuchin attempting to strike a stimulus deal before the election

US stocks broke the 3 day winning streak and the USD suffered as markets await the first US presidential debate due at 1100AEST. All major indices closed in the red with S&P and Dow down less than 0.5%. The greenback however has suffered with the DXY falling back to 93.90 having stopped short of 95.00 last week as month end rebalancing points to further USD selling. It’s hard to judge if there will be any impact on markets during the debate with the likelihood of ‘who won’ analysis post-debate to dictate any price movement, however stock futures could be volatile. AUD was the best performer up almost 1% on the day, the NZD followed but the CAD lagged as Oil prices slumped 5% during the session, closing -3.25%. Gold maintained its recent resurgence holding 1875/80 and pushing up to close at 1897 after reaching an intraday high of 1899. Key resistance sits 1910/20 and is likely to be tested if further USD selling continues. The BoE’s Bailey continued to talk about negative rates but reiterated it’s still some way off, nevertheless GBP had a quiet day and was unable to make further gains despite the weaker USD, closing around 1.2850. Merkel’s comment about a likely delay to the EU recovery fund being delivered saw EUR slip but it was only brief and the pair continued to 1.1750 after breaking back up through the key resistance at 1.1700. Interestingly, despite the stock markets being quiet the biggest mover on the day was EUR/JPY which is the usual barometer for ‘risk on’ moves. Fed’s Clarida, Williams and Quarles all had things to say but the main take away was the continued rhetoric that the government needs to provide the next stimulus. Could be some wait. Chinese PMI’s, revisions to both UK and US GDP and ECB’s Lagarde’s speech are due throughout the day but all eyes will be on the debate and the circus that goes with it.

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