The U.S. Dollar stayed mostly flat overnight with Mexican Peso and South African Rand being significant exceptions. All of the world’s eyes were on the first presidential candidate debate, which affected MXN fluctuation as recent pattern analysis has found an inverse correlation between Trump’s chances of winning and Peso depreciation.
Concerns over destabilizing Brexit effects, Eurozone turmoil, and the prospect of a tactless run-up to the U.S. presidency are negatively impacting equity markets. Bond markets are thriving as investors fly towards safety; yields in Spain and Germany are at record lows, while metals and oil prices fall. The tables have turned, as Iran stated that they are not compromising on freezing production and hold some leverage over Saudi Arabia. The petrocurrencies (CAD, NOK), thus far, are muted.
Purchasing Managers Index and Consumer Confidence will be released at 9:45 and 10AM respectively with expectations of expansion.
Sterling stopped retreating after days of losses resulting from renewed political discord within the UK about how to negotiate full separation from the European Union. GBP fell 1.0% in the last week. Britain’s uncertain trade status with the EU, where half of its exports go, are boosting anxiety among business leaders.
Many countries such as South Korea may be lining up to work on a comprehensive trade deal with the UK as a separate until from the EU already, but the potential loss of freedom of mobility within the continent is now a major worry for the electorate. GBP will be sensitive to any statements on the future of talks and concessions, or lack thereof. But some great deals will be negotiated, believe me.
The Euro finally moved downward. Currently, stock indexes are almost down 1.0% across the continent with German companies causing most of the trouble. The German government said they will not aid Deutsche Bank, whose share value is at the lowest ever. Also, officials are working on a plan to penalize Volkswagen AG for its diesel emissions debacle that is big enough to send make an impact, but does not bring the company to its demise.
The Euro is typically a safe-haven asset with fluctuations affected recently by European Central Bank decisions, however, a new trend may be in line where dwindling markets bring EUR down along with them. It is a big mess. Regulatory mishaps will open the door for competition from elsewhere.