Virus and Stimulus Worries Hit Markets, AU CPIs on Tonight’s Agenda

EQUITIES SLIDE ON RISING COVID INFECTIONS, US STIMULUS CONCERNS

The US dollar traded lower against most of the other G10 currencies on Monday and during the Asian morning Tuesday. It gained only against CHF and CAD, while it was found virtually unchanged against EUR. The greenback underperformed the most versus NOK, SEK, and AUD.

FTSE 100 — TECHNICAL OUTLOOK

Despite still trading below a medium-term downside resistance line drawn from the high of June 9th, the FTSE 100 index continues to balance slightly above the 5766 hurdle, which has been acting as a good support area from around the beginning of September. Although the medium-term trend is to the downside, we would prefer to wait for a strong break below that support hurdle first, before examining further declines.

AUD-TRADERS AWAIT AUSTRALIA’S CPIS FOR Q3

The Aussie was among the main gainers against the US dollar, with its traders awaiting Australia’s CPIs for Q3, due out tonight, during the Asian session Wednesday. Expectations are for the headline CPI rate to have rebounded to +0.7% yoy from -0.3%, and for the trimmed mean one to have ticked down to +1.1% yoy from +1.2%. The weighted mean CPI rate is forecast to have remained unchanged at +1.3% yoy.

AUD/USD — TECHNICAL OUTLOOK

Overall, AUD/USD continues to trade below a short-term downside resistance line drawn from the high of September 1st. Although the pair is seen moving higher from around mid-October, as long as that downside line stays intact, this move higher might be seen as a temporary correction before another leg of selling. We will take a cautiously-bearish approach for now.

AS FOR TODAY’S EVENTS

Tuesday’s calendar is light. We only get the US durable goods orders for September, and the API (American Petroleum Institute) report on crude oil inventories for last week. With regards to durable goods, headline orders are expected to have increased at the same pace as in August, which is +0.5% mom, while the core rate is anticipated to have declined to +0.4% mom from +0.6%. As far as the API report is concerned, as it is always the case, no forecast is available.

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