Morning Update – 20/10/16 – by Arjun Lakhanpal

Morning  all.. A better close on Wall St as oil rallied with the S&P up 0.22% and Asia has built on those gains with the Nikkei up 1.26% buoyed by a higher USDJPY. The debate between Clinton and Trump saw most seeing Clinton in front. Mexican Peso rose to six-week highs at the conclusion of the 3rd US presidential debate, settling now around 18.50 last. Post-debate flash polls showed Clinton winning the 3rd debate with CNN/ORC at Clinton 52% vs Trump 39% alongside YouGov US at Clinton 49% vs Trump 39%. USD rallied across the G10 FX board overnight with AUD the standout under-performer due to weak unemployment data. At the headline level, the unemployment rate improved by 10bp to 5.6%, but this good news owed mostly to another large fall in participation (to a two-year low) whilst employment posted the second straight month of decline and the biggest since Apr 2015. AUDUSD broke below 0.7700 and trades down ~65bps for the start of today’s LDN session. New York Fed’s Dudley (voter) comments supported the USD overnight after he hinted that a 25bp rate hike this year would not be a “big deal”, but there is no great urgency to tighten rates aggressively. Australia’s labour data dominated the data release side with a generally mixed report, holding slighter softer undertones. ECB meeting later today where most expect the central bank to remain on hold. More specifically, they expect policy rates to be kept unchanged with no changes to be made to the asset purchase programme (APP); we continue to expect the ECB to extend the APP beyond March 2017 at, at least initially, the current volume of €80bn. Good luck.