Tuesday 29th September 2020

Currency markets are mixed, while equity markets ease as market focus shifts to the US fiscal stimulus updates and tonights US Presidential debate. Three Fed officials will be speaking today, and their message will likely focus on the need for US fiscal stimulus relief. Dem Pelosi & The Treasury Secretary plan to meet again today to push for pre-election coronavirus fiscal stimulus package of US$2.2 trillion (down from $3.4 tln). Uncertainty remains if a fiscal stimulus deal can be achieved ahead of the election. Global coronavirus pandemic passed a sad milestone of a million deaths today, The World Bank warns that Asia’s growth will be its lowest since 1967 due to the pandemic. CNY weakens slightly vs US$ ahead of Golden Week holidays (1-8 Oct), with Asian currencies remaining flat on average. AUD (Up ¾%) bounces off 8-week lows as expectations are the RBA will not cut rates in Nov. Turkish Lira hits new lows as the Azerbaijan-Armenia tensions continue. ZAR up 0.3%, NOK up 0.45%, NZD up 0.6% with MXN up 0.75% vs US$. Focus remains on Fed speech’s, US Stimulus updates, US Consumer confidence data and this evenings Presidential debate.

Oil prices stall, starting the day down slightly as demand concerns linger amid increasing coronavirus lockdown restrictions. Initial concerns over Azerbaijan’s oil & gas infrastructure have eased with BP commenting that projects are continuing as usual. C$ remains relatively stable in comparison to its peers, holding within a tight trading range. Rising Canadian covid cases, and the likelihood of weaker oil is expected to keep C$ under pressure. Our bias remains to buy US$ on dips. Support at 1.3340 with resistance at 1.3420, if breached look for 1.3537 (Jul21st)

Euro edges higher but further strength appears limited after the ECB Presidents comments yesterday. The ECB President raised concern about the rising covid-19 cases across Europe and its impact on the EU economy and the future remains uncertain. German Harmonized Index of Consumer Prices will be watched closely at 8am est. The only short-term reason for Euro to rally would be on a weaker US$ scenario, under the current covid-19 conditions our bias is to sell Euro on any rally. Support rises to 1.1625 with minor support/pivot at 1.1670, with resistance 1.1785.

GBP stalls below 1.29 as positive Brexit tones are being offset by increasing Covid-19 restrictions. GBP boosted by yesterday BoE Ramsdem comments that negative interest rates were unlikely. GBP has held on to its gains as EU & UK negotiators start another round of negotiations in Brussels. The markets initial optimism for Brexit negotiations may fade after the EU’s terminology describing the intense talks as a “tunnel” . The UK PM continues to struggle with rising national coronavirus cases, and the new lockdowns measure have seen conservative “rebels” trying to limit the governments powers. Bias shifts to sell GBP on rallies. Focus will be on BoE Governor speech today for interest rate comments. Support rises to 1.2800 with resistance at the phycological 1.3000 level.