22nd October 2020 - Optimism about a stimulus deal in the US boosts the aussie


Good Morning,

Market Headlines

Market sentiment remained positive with encouraging hints from talks on Brexit and US stimulus. Equities (and bonds) were restrained, the S&P500 up just 0.3%. Commodities, Brent crude oil futures fell 3.4% to $41.70, copper rose 1.6%, iron ore rose 0.8% to $120.30, and gold rose 0.9%.

Currency

AUD/USD: 0.7071 – 0.7137

EUR/USD: 1.1842 – 1.1880 - a one-month high.

GBP/USD: 1.2977 – 1.3177 - a one-month high – on encouraging Brexit comments.

USD/JPY: 104.35 – 105.31

USD/CAD: 1.3081 – 1.3139

NZD/USD: 0.6605– 0.6676

AUD/JPY: 74.17 – 74.60

AUD/NZD: 1.0676 – 1.0710 - a low since July

AUD Thoughts

- AUD/USD bounces up strongly at 0.7020 to reach session highs at 0.7135.

- Optimism about a stimulus deal in the US boosts the aussie.

A data light day during the Asian trading session, although this evening in the US, however, we get initial jobless claims which should reflect a high level of churn and labour market slack in recent months; this is likely to remain the case, at least in the short-term. The final Presidential debate from Nashville, Tennessee will begin at 9pm ET which will also be watched.

Demand likely rests around 0.7080 while offering interest is expected as close as 0.7130/40 and again ahead of 0.7200

Event Risk Data Today

Australia: RBA Deputy Governor Debelle will speak on ‘The Global Foreign Exchange Committee and the FX Global Code’ at FX Week Australia (09:30 AEST). TheQ3 NAB business survey will see a recovery with business confidence on the mend. This follows a 11-year low in Q2 at -15.

Euro Area: Consumer confidence is expected to deteriorate in October to -15.0 given the rapid rise in new COVID-19 cases and related uncertainty over the economic outlook.

US: Initial jobless claims have reflected a high level of churn and labour market slack in recent months; this is likely to remain the case, at least in the short-term. The housing market continues to see broad support however, with existing home sales expected to rise 3.3% in September (prior: 2.4%).

US: The FOMC’s Barkin and Daly will discuss Economic Equality.

US: The final Presidential debate from Nashville, Tennessee will begin at 9pm ET.

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