From Marc Chandler at Bannockburn Global Forex:
Overview: Neither the US nor China have backed away from the brink approached before the weekend, but the many market participants have concluded that this is an "escalation to de-escalate". The foreign exchange market has unwound some of the pre-weekend price action. The dollar-bloc currencies and Norwegian krone, which suffered before the weekend, are firmer, while the euro, sterling, and the yen has seen last Friday's gains pared. Emerging market currencies are mixed, with the Taiwanese dollar and South Korean won joining most central European currencies are the bottom of the emerging market currency complex today. Of note, the PBOC set the dollar's reference rate at its lowest level since last November and reported stronger than expected exports and imports in September.
The US S&P 500 posted its largest drop in six months before the weekend, and Asian equities fell. Japanese markets were closed for a national holiday, but all the other large markets in the region fell, with the Hang Seng and the index of mainland companies that trade there down the most (~1.5%). Taiwan's market re-opened for its holiday and fell 1.4%. Europe's Stoxx 600, which fell by about 1.7% in the last two sessions, is up about 0.35% today. US index futures are trading broadly higher. The US 10-year yield fell 10 bp before the weekend (to 4.03%), and Antipodean yields fell today. European yields are mostly a little softer. The French political outlook is murky, and its 10-year yield is off about half of a basis point today. Gold has raced to a new record-high near $4080, and the squeeze in silver has lifted it slightly through $51.70. November WTI plunged to nearly $58.20 before the weekend, its lowest level since May, is back trying to establish a foothold above $60.
USD: US banks are closed today and there is no Treasury market, but equities will trade. Investors and traders seem less concerned about the flare up in US-Chinese tensions, even though nothing has been resolved....
....MUCH MORE
