Brexit Drama and US-China Trade Talks Continue, Canadians Head to Polls

**Overview:**

• The Brexit vote did not go PM Johnson's way, and Speaker John Bercow blocked a vote on the Brexit deal in Parliament today

• Trade talks between the US and China are said to be trending positively

• Canadians are flocking to the polls across the Great White North today.

**Highlight:**

The currency market continues to be amazed by the twists and turns in UK Parliament over getting Brexit over the line. Despite fresh defeat over Super Saturday vote, PM Johnson still harbours hope over his version of U.K – EU divorce plan. House Speaker John Bercow blocked a second vote on the EU/PM deal today, saying it would be a disorderly, fruitless effort. With a light economic calendar for the day, Brexit will stay at centre stage.

US DOLLAR

The US dollar is trading with a negative sentiment against a basket of major currencies with the DXY index down 0.15%. Investors don’t see much progress on “phase one” U.S.- Sino trade talks and recent soft data are fueling expectations for more monetary policy easing from the Fed. There is hope that a partial deal in November could eliminate December tariffs on China.  

BRITISH POUND

Trading in Sterling is as expected very choppy following the defeat in Super Saturday’s vote (322 to 306). GBP/USD plunged to 1.2870s during early Asian market open to then recover to trade above the 1.30 handle. The Government is expected to schedule another meaningful vote to approve the deal though House Speaker John Bercow blocked a vote for today. The PM also intends to present the “EU Withdrawal Agreement Bill” this week. We expect the currency pair to register wild swings as discussions in the House of Commons continue.

EURO

The EUR/USD is trading near a two-month high, driven mainly by ongoing developments over Brexit. The market seems to be pricing a no-deal exit despite PM Johnson failing to gather enough support last Saturday. The pair also moved closer to key 1.12 level after reports emerged that Washington and Beijing are getting closer to some sort of trade agreement. Though we have few details on the progress of “phase 1”, the market is happy to move higher on recent headlines.

CANADIAN DOLLAR

USD-CAD is oscillating around the 1.31 handle as the Canadian goes to vote in a general election today. Polls believe a tight result, but we expect little impact on the currency pair. Investors will, instead, prefer to focus on core retail sales numbers due tomorrow as well as the release of the Business Outlook survey from the central bank. The details of this report will give ample fodder for the next directional moves from the Bank of Canada.

AUSTRALIAN DOLLAR

Positive headlines about US-China trade talks have helped the Aussie dollar continue on an upward trajectory. The last AUD to USD chart showed 0.68716.

FEATURED CURRENCY

Dollar-Yen is searching for direction as the North American market opened for the week. The pair pulled back from the session’s high near 109.00 as market sentiments continue to swing between optimism and pessimism. Earlier today, the release of the Japanese All Industries Activity Index failed to impress and inject any trading activity. After all, the needle hardly budged from 0. With little on the economic slate today, we expect USD/JPY to enter a phase of consolidation around current levels.

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