US equities closed out Q3 with another higher close overnight.

The statement from US Treasury Secretary Mnuchin saying: “one more serious try” on a fiscal stimulus deal after more talks took place overnight, helped improve investor sentiment.

The escalator clause could be the special sauce and maybe how the Republicans try to meet the Democrats where they are. And House Nancy Speaker Pelosi can still feel like she can claim victory in getting the number closer to her $2.2 trillion target.

The stimulus deal is very much needed and will come as a massive relief to many unemployed Americans who were having a vision of that proverbial lump of coal in their holiday stocking this year. Mind you, more than a few traders were too.

Global risk appetite benefited from positive noises around a stimulus deal from Washington as the market was still soggy from the US presidential debate debacle.

Yesterday turned even more bizarre when the Chicago PMI data got leaked early, leaving trading “Zoom crews” worldwide scratching their head.

The issue at hand is not the ones driving the sentiment but rather the ones that can’t feed their families. Come on, folks, get with the game plan, pull that moral compass out of your pockets and start gaslighting congress.

But there were numerous moving parts overnight as the US’ bellwether housing market remains alive and kicking.

The big kicker here is that as house prices are buoyed, consumers feel wealthier. They will be more prone to spend elevated savings levels. It’s super for the economy and provides a considerable growth impulse.

Currency Markets: Month-end noise

The FX market is pricing an excessive amount of variance for the US presidential election, which is clouding the viewfinder that’s for sure.

Outside of the Pound, which is all about going into the secret meeting tunnel, there was no clear bias to G-10 FX flows overnight. This isn’t abnormal into the month-end. Sometimes we get the noise other times we don’t. Yesterday there was too much going on in the background which tamed the month-end USD buy signal.

The Malaysian Ringgit

Higher oil prices, improved risk sentiment, and sturdy beta to the Yuan should see the Ringgit trade well as the local equity market stabilise and should continue to push higher. Golden week suggests reigning in your bullish ambition, but there is certainly no need to cash in your long MYR positions just yet.

US dollar holds support

The dollar is still holding a bid today even with risk sentiment flourishing as traders appear content to sit on the long dollar hedge to cover the prospect of contested US election results.

The post-debate traders are still focused on the volume market rather than spot or any other signpost. The gap between 1 million and 2 million USDJPY implied vol – highest in the time series’ history – is a case in point, reflecting concerns about a delay in a definitive result after election day.

And the fear of what could lie ahead makes it difficult to lather up long currency risk.

Political challenges on the non-stop flight corridor from Tokyo to Washington challenge the Yen view in either direction these days.

Choppy price moves for the EURUSD

Price action has been choppy. EURUSD was briefly back below 1.17 after two consecutive days of gains, but 1.1690 was held again. Flow has been relatively light, as month-end was a bit of a dud.

The street so desperately wants to get long EURUSD on dips. But it’s not 100% clear to me that the uptrend remains intact. We have decoupled from the absolute bullish uptrend, (ECB more dovish the US FED less dovish).

Attempts to finalize the EU Recovery Fund’s text are running into a few snags.

But the main dead weight for the EUR is that European inflation is falling hard. With Germany in deflation and France about to cross from positive to negative YoY CPI. ECB may need to react, and ECB President Christine Lagarde is already laying the ECB version of average inflation targeting (AIT).

Gold’s energy sapped by firm US dollar

Gold’s energy was sapped by firmer US dollar and didn’t gain on US presidential debate, but there is sufficient uncertainty on the street to hold prices in check.

Gold is often especially sensitive to EUR-USD developments. ECB President Lagarde’s comments are a reminder that it is not only the Fed that can send a message of a dovish tolerance for above-target inflation. Were the EUR to weaken, this could prove an additional burden on gold.

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