Daily Market Update

U.S. Dollar in Tight Ranges Ahead of Brexit Vote

October 22, 2019

The U.S. Dollar rose slightly against its G-10 counterparts overnight as risk appetite modestly faded.

Overview

The New Zealand dollar and other commodity-based currencies ticked higher on hopes a China-US trade deal are on the horizon.  Again, we are not sold.  Nevertheless, the New Zealand dollar is at its strongest level since early September.

The Canadian dollar was mostly unchanged after news that Prime Minister Justin Trudeau won a second term.  Trudeau, however, failed to win an outright majority but will rely on an alliance of smaller parties to form a coalition.   

Markets are likely to hold ranges ahead of this afternoon’s Brexit vote, but there is some U.S. domestic data that is worth watching.  The Richmond Fed and existing home sales will cross the wire at 10 a.m.  There are not Fed speakers for the rest of the week.

 

What to Watch Today…

  • Brexit Vote: U.K. Parliament at 2PM

Complete Economic Calendar can be found here.

 

EUR

The Euro turned slightly negative against the U.S. dollar and remains under heavy pressure against the pound sterling.  News out of the EU was fairly light but some budget news acted as an excuse to sell the Euro at its recent highs.  The European Commission told five countries including Italy and France that their draft budgets for next year were against the Euro-zone’s fiscal rules.  Under EU rules, no country can have a deficit larger than 3.0% of GDP.  Many countries will struggle not to breach these rules if governments deem it necessary to ramp up fiscal spending in the face of threats of a global slowdown.

 

GBP

Today will be a pivotal day for Brexit. Sound familiar? Probably.  Prime Minister Boris Johnson’s withdrawal deal will see a meaningful vote this afternoon in Parliament.  There are have been a few developments in early trading and we expect news to come early and often today.  Bloomberg is reporting that if lawmakers defeat Johnson’s bill, he will scrap his attempt to pass a Brexit deal and move straight to an election.  The sterling dipped lower on this news but is still elevated versus both the greenback and the Euro.  The main vote is expected to come around 2 p.m. Eastern Standard Time.

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