Another sizzling session for US equities with the S&P up 1.5% overnight. And yes, that is yet another record high – with similar sized gains through Europe.

The S&P 500 scored its most significant advance in almost two months, driven by gains in previously lagged groups, such as utilities, materials, and real estate. Some of the year’s best-performing stocks were among the biggest losers amid a risk-on rally supported by dovish comments from policymakers.

The broad advance signalled extreme confidence in the global economy’s bounce back from the pandemic knockdown, while positive news on a coronavirus vaccine could help speed up that recovery.

White House coronavirus advisor Dr Anthony Fauci said the board overseeing vaccine approvals could decide that “the data is so good right now that you can say it’s safe and effective.”

Just the thought of the one-stop recession plugger in the form of a vaccine booster is more than enough to give investors a real-time shot in the arm to expand their wings, snapping up those laggard’s hand over fist.

The risk-taking was underpinned by dovish commentary from New York Federal Reserve Bank President John Williams who said the Fed has made it “unequivocally clear” that they seek maximum employment and aim to eliminate shortfalls.

The easy-money policy adds fuel to the trade. Indeed, stocks are forever churning higher as investors anticipate a flood of cash coming into the market.

Forex: A decisive shift in the Euro narrative

A decisive shift in the narrative in the Euro is unfolding, and the price action might not entirely be caught up to the new storyline just yet.

The EURUSD is still in the grinding up the channel, but the narrative is less bullish than after the significant bull target of 1.2000 was soundly rejected.

With European Central Bank (ECB) Chief Economist Philip Lane saying the “Euro matters”, his statement carries a credible voice the market will respect amid the first bearish shot across the Euro’s bow. Lane is Chief Economist, and that role has more importance than usual in this ECB because Christine Lagarde is a lawyer, not an economist.

And to a great extent, the Euro rally has been on a speculative wing and a prayer that the EU economy will outpace the US recovery, but that has not been the case with US housing and manufacturing booming.

I guess that EURUSD grinds lower into the ECB meeting as the market reduces significant length into what is becoming an obvious event risk. The attraction of a dovish Fed on September 16 might not be strong enough to offset the ECB’s downside risks on September 10.

As far as the US Fed is concerned, I do not think they were anywhere near as dovish as the market read. September easing looks possible but not likely, suggesting the Fed’s sense of urgency feels lower than it did a few weeks ago as both housing and manufacturing are booming.

The ringgit under pressure as US dollar strengthens

The stronger dollar and lower oil prices will likely blunt the edge of the ringgit rally, but demand for local government bonds will likely cap USD dollar buying towards 4.1550

Gold loses some shine

Gold prices fell as the US and European equities advanced and the US dollar headed for the biggest gain in two weeks.

Investors are now focusing on Thursday’s initial US jobless claims report and Friday’s non-farm payroll data. The market may mark time on Thursday until the jobs data.

The moderately bearish seasonality for gold in September also seems to be dragging gold lower, which is getting compounded by less real money buying interest over the past few weeks. The market now leaning our way trading gold from the short side as I still suspect the 6-8% correction at one point in the last month might leave the asset scarred for a little longer.

International markets analysis and insights from Stephen Innes, Chief Global Market Strategist at AxiCorp