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Stocks Soar As Brexit Chatter Sends Sterling South

Published 2016-10-04, 09:18 a/m
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Stock markets overseas rallied overnight ‎and into this morning. The FTSE lead the pack rallying 1.6% while the DAX was up 0.5% on its return to trading and the Nikkei rose 0.8%. US futures are up 0.1%. Crude oil contracts are down 0.3% in normal trading corrections with Brent still above $50 and WTI still above $48.

UK markets remain in focus today. Cable has broken $1.2800 to a new 30-year low following reports that the UK government may not seek special protection for The City (UK financial sector) in Brexit talks. Meanwhile, the positive benefits of the lower pound continue to shine through as UK Construction PMI moved back above 50 into expansion territory, beating the street.

There hasn't been any news related to Deutsche Bank's (NYSE:DB) financial woes or the potential size of its large US fine. Gold continues to trend lower, however, indicating that the street does not expect either Brexit or European bank capital to spiral into a global financial crisis.

USD is trading higher today relative to most majors including EUR, JPY, GBP and CAD. Yesterday's US economic reports were mixed with manufacturing PMI beating and construction spending staging a surprise drop. The next big data points for the US are ADP payrolls on Wednesday and nonfarm payrolls on Friday.

The vice presidential debate takes place tonight and is usually a snoozer but could be somewhat significant for trading in the Mexican peso today in light of the close contest and US-Mexican relations being a core campaign wedge issue. North of the border, the Blue Jays do-or-die playoff game tonight is likely and deservedly going to attract far more attention.

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