Equity Bounce Prompts Weakest JPY in Three Weeks

For a second straight session, the JPY was the weakest performer Wednesday, falling against all others in G10 as markets looked to price in the longer-term odds of further fiscal stimulus in the US. Despite markets falling sharply Tuesday on Trump pulling the rug from under bipartisan talks, stock markets globally rallied as the President doubled down on his promise to conduct stimulus piece-by-piece, starting with direct payment checks, airline support and an extension of PPP. Markets weighed up the likelihood of this against an eventual Democratic victory in November, after which the odds of a larger spending package look far greater.

• Conflicting signals over the progress of UK/EU trade negotiations kept intraday volatility in GBP/USD at elevated levels, with reports suggesting the UK negotiation team will walk away if no deal is made by October 15th. GBP was mixed, with 1.2787 100-dma providing some support from here.
• Thursday sees the release of US weekly jobless claims and speeches from BoE's Bailey, ECB's Schnabel, de Guindos, de Cos & Mersch as well as BoC's Macklem, Fed's Rosengren & Bostic.