The Dow jumped as much as 205 pts over night as US senate passed the accord that would help end the current fiscal impasse and avoid the first default in history. S&P 500 also jumped 23.48 pts to close at 1721.54, very close to record high of 1729.86. Dollar index edged higher to 80.75 but failed to sustain gain and is back at around 80.4 at the time of writing. In the currency markets, the greenback is still struggling in tight range against euro and there is no follow through buying against Sterling and Swiss Franc. Indeed, the greenback is mildly lower against Aussie and Loonie on risk appetite. The yen is mildly softer in crosses but there was no decisive moves neither.
Latest Update: House also passed the bill by 285-144 votes and President Obama has already signed.
The Senate voted 81-18 on an accord to halt the first partial government shutdown in 17 years and raise the debt limit. House is debating now and is set to vote later tonight in US. President Obama said he's sign the agreement immediate once it "arrives on my desk" and will "begin reopening our government immediately". The agreement would fund the US government through January 15, 2014 and suspend the debt limit through February 7.
Fed Beige Book released overnight showed economic activities continued to expand at a moderate to modest pace across districts. Outlook remained cautiously optimistic in general but there was uncertainty due to government shutdown. Consumer spending rose modestly in most districts. Business spending grew modestly across districts. Employment growth was modest. Manufacturing expanded modestly. Real estate and construction improved. Financial conditions were relatively unchanged with modest loan growth while increasing mortgagee rates weakened loan demand in some districts. Price pressure was generally limited.
On the data front, Australia NAB business confidence improved to 3 in Q3. eurozone current account, UK retail sales, Canada international securities transactions and US Philly Fed survey will be released later today.
USD/CAD Daily Outlook
Daily Pivots: (S1) 1.0306; (P) 1.0345; (R1) 1.0365;
The USD/CAD dropped against over night, but stays above 1.0289 minor support and intraday bias stays neutral first. Focus remains on this support. Break will indicate that corrective rise from 1.0181 has completed and should target retest on this low. Break will target 1.0013 cluster support (61.8% retracement of 0.9633 to 1.0608 at 1.0005) next. Above 1.0419 will bring another rally but we'd expect strong resistance below 1.0567 to limit upside and bring reversal.
In the bigger picture, price actions from 0.9406 are viewed as a consolidation pattern with rise from 0.9633 as the third leg. Current development argues that this third leg has already finished. It's uncertain whether the consolidation is totally completed already or is developing into a triangle pattern. In either case, deeper decline would be seen back to below parity. We'd be cautious on rebound ahead of 0.9633.
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