Daily FX market outlook

Daily FX market outlook

Mexican peso surges on Clinton win after first debate; yen and gold weaken

Risk appetite was back in the currency markets on Tuesday after the first US presidential debate suggested that Democratic candidate Hillary Clinton won the debate late on Monday against Republican candidate Donald Trump.

A poll by CNN/ORC indicated that 62% of respondents said that Clinton won the debate. There was a relief rally in risk assets and the S&P rose, while safe havens like the yen and gold saw losses.

The Mexican peso benefitted the most from the results because a Trump victory would threaten Mexico’s exports to the United States, which happens to be its single biggest market. The peso moved off record lows and gained almost 2% against the dollar as the USDMXN pair tumbled to 19.4773 in the Asian session.

Safe haven currencies like the yen weakened and unperformed against most of its major counterparts. Then dollar moved off one-month lows of 100.07 yen to climb to 100.88 yen in Asia.

Higher-yielding currencies including the Australian, New Zealand and Canadian dollars also gained versus the greenback. The aussie surged to $0.7667 and the kiwi to $0.7293. The USDCAD pair slid to $1.3165.

Gold fell to a session low of $1334.22 an ounce after gaining in the past six days.

Oil prices are in focus today as the meeting with OPEC members and Russia is underway in Algiers until tomorrow. Investors are being cautious in case there is no agreement reached on freezing oil output levels so there was generally some profit-taking on the commodity today. WTI futures moved off yesterday’s highs of $46.18 a barrel to last trade around $45.82 in Asia, while Brent crude traded around $47.13 a barrel.

Looking ahead to the rest of the day, the European economic calendar is looking quiet while most of the focus will be on data out of the US. The S&P/Case Shiller House Price Index, Markit’s flash services PMI and the CB consumer confidence reports are all due to be released today out of the US. A speech by Federal Reserve Governor Stanley Fischer will also be eyed.