Markets held in overnight trading as month-end effects kick in and investors await an interest rate cut from the US Federal Reserve Open Market Committee. The British pound traded a narrow range at higher levels after the UK parliament approved a December 12 election.

British Prime Minister Johnson is attempting to break the parliamentary impasse on Brexit by seeking an increased majority from the British public. Polls show the Conservative party leading the opposition by around ten percentage points. The UK 100 index closed lower despite the increased potential for an orderly break-up with the European Union.

US indices edged lower overnight despite better than expected company reports, as the season passed the half way mark. Bloomberg aggregate data shows sales running 1% ahead of forecasts, and flat profits beating consensus of a 4% fall. A 3% lift in the US SPX index over September could see month end selling, and a lower read on consumer confidence contained enthusiasm.

Interest rate traders are pricing a 94% probability of a 0.25% reduction in US rates tonight. This strong consensus makes the accompanying commentary crucial to potential market reactions.  In contrast a 40% chance of a further 0.1% move into negative cash rates in Japan tomorrow means the Nikkei and Japanese yen are likely to react whatever the Bank of Japan decides.

Currency markets are steady ahead of these potentially high-impact events.

Australian inflation data today is expected to show a 1.6% p.a. increase in inflation in the third quarter. The read speaks directly to RBA intentions next Tuesday, and any divergence from forecasts could drive local trading. Futures indicate a slightly negative start to regional share trading, although Hang Seng futures defied the overall trend to record an overnight gain.

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