Commodity currencies have outperformed, led by the CAD and AUD, as Putin said that Russia is ready to join OPEC in limiting oil production with either a freeze or a cut. Oil prices climbed to their highest level in a year, with Brent crude reaching as high as $53.70 overnight and WTI peaking at $51.60. Equity prices rose, led by the energy sector.
CAD is up around 1%, taking USD/CAD down to 1.3170. The AUD has also been buoyed by the news, with the currency blasting through 0.76 this morning.
Amidst a generally robust USD picture, NZD/USD is down a touch and trades this morning at 0.7130. This is below our short term fair value model estimate of around 0.7250. This is noteworthy, as the currency has spent much of this year above our model estimate. The NZD has weakened over a period of robust risk appetite and higher commodity prices, driving the “value-gap”.
NZD/AUD has broken down below 0.94 and sits at 0.9370. There is plenty of technical support around the 0.93 mark and earlier in the session the currency tested and failed to break through the 200-day moving average of 0.9335. Our two short term models put fair value in a 0.92-0.95 range.
The USD is stronger following the second US Presidential debate. While Mr Trump's performance was seen to be improved from the first debate, the general view is that the damage to his brand from fresh media reports over the weekend is now irreparable. A Clinton victory would ease the way for the Fed to hike again in December, avoiding a possible risk-off move under the alternative scenario. GBP, EUR and JPY are all down circa 0.6-0.7% against the USD.
The second-tier data releases on the economic calendar over the next 24 hours shouldn’t be market moving. Traders should be wary of headlines around the RBNZ McDermott’s speech at 4pm today, with the Assistant Governor talking about the low inflation environment in NZ.
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5 Comments
There's only 4 things to know about Clinton
1.....She knows more than the FBI.She and her staff deleted 30000 emails that THEY considered to be personal.
2....Huge supporter of Senator Robert Byrd,Exalted Cyclops in the KKK and former recruiter for KKK.
3...Her hubby introduced NAFTA with her support.
4...Hubby repealed the GLASS STEAGALL ACT which allowed Lehman Bros and all their crooked mates to
crontribute hugely to the GFC.As a New York Senator she defended Slick Willie for doing this.
Ther is no doubt that she is crooked and the fact the the Yanks have only her and Trump to select from is shameful.
Bringing up Trumps dirty talk did more damage to Hilary Clinton than Trump himself, as the counter attack has brought up more negatives for her. I don't know -- I may be wrong, but I think --it is now for the American people to vote for change and the lesser evil.
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