The Canadian dollar was largely ignored and remained trapped in a narrow trading range overnight. FX traders were cautious ahead of tonight’s U.S. Presidential Debate. On one side, there is President Trump, "the man who pays no taxes," and on the other side is Joe Biden, "the man who will raise taxes." There are only 35 days to the election, and Biden is leading in most polls. On the same date in 2016, Hillary Clinton was leading in most polls, suggesting the election winner is still a coin toss.
The Canadian dollar greatly underperformed its antipodean peers in overnight price action. AUD/USD rose 0.59% while NZD/USD gained 0.53% on the back of a modest improvement in risk sentiment. Asia stock markets were mixed to flat, ignoring the Wall Street performance.
In Europe, Eurozone Economic Sentiment data was better than expected, rising 91.1 in September, compared to 87.5 in August. The news overshadowed soft inflation data from France and Spain. EUR/USD technicals turned bullish on the break above $1.1670 Traders are now looking for a test of resistance in the $1.1750 area.
GBP/USD climbed in Asia, rising to $1.2887 from $1.2832, after The Times of London reported that the European Union had dropped its demand for a broad agreement on areas in dispute in trade talks, before writing a trade agreement. In return, the U.K. will begin in-depth discussions on fishing and state aid, significantly reducing the risk of a "no-deal" Brexit.
USD/JPY is trading just below its overnight peak of 105.73, as improved risk sentiment encouraged the unwinding of safe-haven trades. The Bank of Japan Summary of Opinions from the September 17 monetary policy meeting noted that "the pace of the recovery is slow, so they must remain vigilant."
AUD/USD tested support at $0.7000 last Friday, and it held. Prices have been climbing since, and the uptrend is intact above $0.7070. Improved risk sentiment has underpinned prices. NZD/USD is tracking AUD/USD gains.
Wall Street closed with decent gains, led by a 1.87% rally in the NASDAQ. That performance may not be repeated today if U.S. futures are any indication. S&P 500 and Dow Jones Industrial Average futures are flat.
Today’s U.S. data, which includes Case-Shiller Housing Price Index, Consumer Confidence, and Wholesale Inventories should not have much impact on FX trading, due to the upcoming debate.
