Market Drivers October 22, 2019
Cable comes under pressure
Risk flows wobble
Nikkei 0.25% Dax 0.03%
UST 10Y 1.77%
Europe and Asia:
CAD Retail Sales 8:30
Its been a very quiet night of trade in FX today with most pairs stuck in very narrow ranges with little newsflow to move price either way. Cable, however, was weaker ahead PM Johnson’s meaningful vote later today.
It appears that the Prime Minister may have the votes to get his deal approved, although the margin is slim and last-minute drama is always a possibility. However, even if the PM can get the vote through Parliament there is considerable opposition to the timetable of the deal as Mr. Johnson is eager to ram the Brexit deal through ahead of the October 31st deadline.
The MPs are very concerned that such a complex deal with many of the trade provisions with EU not yet negotiated, would be rushed through Parliament without much scrutiny. Mr. Johnson, on the other hand, is set on delivering a Brexit deal before the deadline and the next two weeks will be a battle of wills between him and Parliament.
The markets, of course, are eager for a resolution and any uncertainty will bring out profit-taking flows in cable. The pair fell sharply at the start of the London trade and is holding below 1.2950 figure, but could once again rally through 1.3000 if the meaningful vote passes later today.
Elsewhere, Justin Trudeau will remain Prime Minister for a second term in Canada albeit running a minority government. The loonie had very little reaction to the news as the generally expansive fiscal policies will continue under the new regime. Today the market will get a glimpse at CAD Retail Sales which are expected to be flat from the month prior, but if the number beats USDCAD could test the 1.3050 once again as the bottom end of the long term range will be probed by the shorts.