Daily Market Commentary 23rd October 2020

Asian markets were mired in gloom during yesterday’s trade, after the revision of the IMF growth forecasts for the region, lower. The IMF said growth would contract 2.2% for 2020, which is the lowest on record, shaking market confidence. The negativity combined with flagging prospects surrounding the US stimulus bill. The EUR traded 1.1810, while the GBP traded 1.3080, both being impacted by the EU/UK trade deal talks. EU Chief negotiator said that a deal with the UK was ‘within reach’!?

US markets saw a sharp reversal in fortunes, with growing confidence on a bailout stimulus deal, with the Whitehouse commenting they had made ‘good progress’, but ‘they still had a ways to go’. The bailout/stimulus package is essential for the economic recovery, according to Fed Chairman Powell. The Fed also released their Beige Book report. They confirmed that the recovery was ‘slight to modest’, but that record low interest rates through to 2024, would be great for the housing markets and investment lead growth.

Commodity based currencies dipped on the IMF news regarding growth in the Asia/Pacific reason but fought back as US markets recovered. The AUD broke back strongly above 0.7100, while the NZD traded up to 0.6880, now enjoying the fruits of political certainty. The final US Presidential Debate tonight, may well go a long way to determining outcome of this contentious election, which will drive markets over the short, medium and long term.