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Article / 10 October 2016 at 7:00 GMT

Morning Markets: Knives come out at second US debate

Editor / Saxo Bank
Denmark

Morning Markets: Prices

Watchlist

  • Germany: Foreign Trade (0600 GMT) 
  • Eurozone: Sentix Investor Confidence Index (0830 GMT) 
  • US: CB Employment Trends Index (1400 GMT) 

Republican presidential candidate Donald Trump came out swinging in the second US debate Sunday night following days of embarrassing headlines concerning lewd comments made in 2005. Attacking Democratic candidate Hillary Clinton on issues ranging from her email server to allegations of sexual assault levelled against her husband, Trump took an "all or nothing"-type approach that signals what is likely going to be a bitter and tumultuous fight for the White House.

Unlike the first debate, markets essentially refused to call a decisive winner this time, although the Mexican peso did start a steady decline versus the USD following the event, a sign of Trump strength. Interestingly, the debate also exposed a potential rift within the Trump campaign when the Republican candidate admitted that he differed from his vice-presidential pick Mike Pence in terms of Syria policy.

With the conflict in Syria now essentially a proxy war between Western-backed rebels and the Russian-backed Assad regime, it will likely be the most perilous diplomatic and military minefield for the next president.

Beyond the debate, crude oil prices continue to head lower in the wake of Russia's stating that it does not believe any sort of deal will be reached with Opec in Istanbul this week. New reports out of Germany state that the country is considering certain legal and regulatory changes to make it even more attractive for UK financial services business to move their operations to Frankfurt post-Brexit.

German data are in focus this morning as Berlin just posted its latest trade figures, which showed exports posting their biggest rise in more than six years. The news, however, has not seen much reflection in the euro pairs.

Market signals

Asian session

  • Chinese markets came back from the National Week holiday today
  • US markets closed for Columbus Day
  • Markets in Hong Kong, Japan and Taiwan are shut for public holidays
  • Asian markets opened mixed ahead of the US presidential debate
  • The Kospi was down 0.13%, recovering from earlier losses of more than 0.53%
  • Chinese markets were higher with the Shanghai composite up 1.25%
  • Post-debate MXN declines point to Trump strength

Forex ahead

  • The Mexican peso gained 2% amid the presidential debate
  • The dollar held steady at 102.85 yen after tumbling 1% on Friday 
  • EURUSD fails to post gains on German exports blowout
  • USDCAD continues to climb as oil retreats ahead of Istanbul meeting

From the Floor

Oil lower. “Iraq is planning to increase production and that is adding pressure on Saudi Arabia,” says Hansen 

Peso Trumped?USDMXN actually headed back above the 19.0 handle,” says Van-Petersen

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In  opinion

1..2..3
The German economy is in focus today with the August update on foreign trade, and recent data paints a relatively upbeat profile, says James Picerno.

Clouded outlook
Given the high impact events of last week, we need to wait for the dust to settle to determine if the markets are coming or going, explains Kay Van-Petersen.

Overseas focus
The ASX 200 opened higher but all eyes were set to be on the second US presidential debate, writes the team at Saxo Capital Markets (Australia).

Trump card
The loss of support to Donald Trump over the weekend helped USDMXN drop significantly in early Asia trade, say Singapore's Saxo trading team.

Clinton vs. Trump

The 2016 presidential contest just became a lot more 
bitter and heated. Photo: Wikimedia Commons

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