Collinsonfx Daily Market Commentary

Global markets rallied strongly, as the winds of change swung positive. Great hope has arisen in Europe over a Brexit deal, with both sides speaking positively, even with an extremely tight schedule. The deadline is 31^st of October and this has forced compromise and a possible deal. The GBP continued a huge spike, trading 1.2775, while the EUR traded 1.1025. The Brexit deal news overwhelmed and dominated markets, ignoring a slight rise in UK Unemployment numbers and terrible German and EU ZEW Economic Sentiment reports.

This flowed through into US markets, which had been nervous over the US/China trade deal and the incomplete nature, which still demanded further negotiation. US earnings season began with great aplomb, with reporting Companies beating expectations, above and below the line. This all added to the positive mood of markets, with equities surging, while bond yields continued to book gains.

Speculation over an unfinished US/China trade agreement and the negative consequences of the agreed upon arrangement, has tested trade exposed commodity currencies. The AUD fell back to 0.6750, while the NZD drifted to 0.6280, ahead of important CPI data being released today. The RBA and RBNZ continue their bearish approach to monetary policy, in contrast to the Federal Reserve, adding to downside pressures.