Following the debacle of the ‘circus’, I mean, the televised US Presidential Election Debate last night, the risk-on sentiment remains undeterred. From what I could gather, backing up the existing positive order flow seen in equities as I explained in yesterday’s video analysis,  we find Dems and GOP giving another go to a fiscal stimulus package.

The price action in the last 24h had striking similarities and in a way is an analogous script to the one playing out on Monday. That is, risk-off associated currencies (USD and JPY) kept giving back gains with the Loonie also following the same path south. The Aussie and Gold continued to be the standout performers with the European block currencies (EUR, CHF, GBP) either hanging onto recent gains or finding further follow through demand. Lastly, the Kiwi, even if rising, remains an underperformer judging by the reinvigoration of equities.

The strength in the British Pound was the stand out feature on Monday amid less pessimism over a no trade deal between the UK-EU coupled with growing chatter that the BOE won’t go down the route of negative rates in the near future. The final round of negotiations are upon us ahead of the EU leaders’ summit on October 15th. 

The US Dollar and the Japanese Yen were the clear winners last week, while the Oceanic currencies and Gold were decimated. Sandwiched in the middle we find a group of four currencies (EUR, GBP, CAD, CHF) characterized by a far less acute imbalances of flows. US equity indices have been fairing far better, which helps explain the stalling in aggressive buy-side flows in the USD, JPY from earlier in the week. 

It was largely an undecisive and choppy day in the markets on Thursday with both the US Dollar and the Japanese Yen retracement a tad the huge gains made over the last week. Meanwhile, the Canadian Dollar outperformed, followed by a solid run in the Euro and Pound. The Aussie and the Kiwi saw a small round of buying at last. 

The story of the week is the strength in the US Dollar. This move is definitely very meaningful and carries behind the type of real-money commitment that has finally allowed some huge technical milestones.