Forex Today: Boris and sterling brace for more Brexit drama, some stability in trade, and Canada votes
|Here is what you need to know on Monday, October 21:
- Brexit: GBP/USD kicked off the week with a drop toward 1.29 after an eventful weekend. Parliament forced the government to ask for an extension to Article 50. Prime Minister Boris Johnson still continues trying passing all the relevant legislation this week. It is unclear if House Speaker John Bercow will allow another "Meaningful Vote" which failed on Saturday, but the vote on the Withdrawal Bill is set to be debated on Tuesday. While Johnson may be nearing the votes to pass his Brexit agreement, the opposition may try to add amendments, for a customs union or for a second referendum. EU Leaders will be watching and are ready to approve an extension if lawmakers fail to approve Brexit. Sterling volatility is set to remain elevated.
- The US Dollar kicked off the week little changed after falling on Friday. Richard Clarida, Vice-Chair of the Federal Reserve has not pushed back against market pricing of a rate cut later this month. Some speculated that he quietly endorsed a rate reduction. Moreover, weak Retail Sales weighed on the greenback last week.
- Trade: Chinese Vice-Premier Liu He said the US and China made concrete progress. In the meantime, China left the Loan Prime Rate (LPR) unchanged. The world's second-largest economy thus postpones monetary stimulus to 18 of its banks.
- Europe: Incoming European Central Bank President Christine Lagarde has put the blame for the global slowdown on US President Donald Trump's trade wars. Other reports suggest the ECB will leave refrain from introducing additional stimulus this year. Outgoing ECB President Mario Draghi presides over his last decision on Thursday.
- Canada holds Federal Elections today with a tight race between incumbent Justin Trudeau and contender Andrew Scheer. battle for the top job. Markets will be content with both candidates if either gain an absolute majority.
- Cryptocurrencies have recovered from the lows with Bitcoin trading above $8,000.
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