Equities remained under pressure, with Wall Street closing in the red on Friday. US indexes have their worst weekly performance since March. Concerns related to the number of new coronavirus cases in Europe and the US, alongside uncertainty about the US presidential election, were behind the dismal mood. US 2yr treasury yields rose from 0.14% to 0.15%, while the 10yr yield rose from 0.80% to 0.88% - the highest since June. Commodities, Brent crude oil futures fell 0.5% to $37.94, copper rose 0.1%, iron ore rose 1.7% to $117.90, and gold rose 0.6%.
AUD/USD: 0.7011 – 0.7071
EUR/USD: 1.1640 – 1.1704 (a one-month low)
GBP/USD: 1.2900 – 1.2988
USD/JPY: 104.17 – 104.74
USD/CAD: 1.3280 – 1.3350
NZD/USD: 0.6598 – 0.6671
AUD/JPY: 73.16 – 73.91
AUD/NZD: 1.0597 – 1.0634
Markets are bracing themselves for a volatile week ahead. The US election results (3-Nov evening) will undoubtedly be the most closely watched event of the week ahead shape risk appetite and volatility. Domestically, the main event is the RBA Board meeting on Tuesday where we expect further policy easing to be announced.
Bids from 0.7000 for the coming sessions with offers now expected from Friday’s highs in the 0.7070 region
Event Risk Data Today
Australia: Market expects the September update of dwelling approvals to see falls emanating from the Vic lockdown, partially offset by gains elsewhere (prior: -1.6%,Mkt f/c: -3.0%). After a 12.6% rise in Aug, housing finance is set to dip 2% in Sep as a result of the Vic lockdown and despite support from the Home Builder scheme. The CoreLogic home value index will likely see weakness in Melbourne prices, with Sydney flat and others firming (prior: -0.2%, mkt f/c: 0.2%). Demand for labour continues to recover across the virus-free states, ANZ job ads having jumped 7.8% in Sep. The MI inflation gauge will meanwhile continue to see very muted price pressures (prior: 0.1%).
NZ: Building permits are expected to remain at firm levels (prior: 0.3%).
China: The Caixin manufacturing PMI will be impacted by less work days due to Golden Week holidays (prior: 53, market f/c: 52.8).
Euro Area: The deceleration of business activity as Covid cases surge will be reflected in the Markit manufacturing PMIs for the UK and Euro Area.
US: The Manufacturing PMIs are expected to remain expansionary in Oct at 53.3 (Markit) and 55.6 (ISM), supported by business optimism over the recovery to date and with the election now in sight. Construction spending is being supported by residential work; the uptrend is likely to be maintained (prior: 1.4%, market f/c: 1.0%).