Sterling rallied yesterday morning and has hung onto its gains overnight. Brexit newsflow was mercifully straightforward yesterday: House of Commons speaker John Bercow denied the Government’s attempts to force a second “meaningful” vote on Boris Johnson’s withdrawal deal, forcing him to instead attempt to pass legislation implementing the same deal first. This vote will happen today, with the results expected from around 7pm BST. The Withdrawal Agreement bill was finally published at 8pm last night, running to 110 pages and 125 pages of explanatory notes – giving MPs little time to review its details. No economic analysis of its impact was provided. Although analysis of Parliamentary arithmetic from major sources such as the FT and Guardian concludes that Boris has a good chance of passing the legislation through the House of Commons with support from rebel Labour MPs, the late publishing of the text of the bill last night may cause some hesitance.


EURUSD price action was rather restrained yesterday, with the pair trading in a narrow range even by its own standards, amid a lack of major news flow. Spanish Prime Minister Pedro Sanchez visited Barcelona yesterday amid ongoing protests, while denouncing violent protest. No headline euro data will be released today.


The narrow dollar index DXY stabilised yesterday, with modest gains versus JPY making up for losses elsewhere including sterling. President Trump once again indicated that trade talks with China were going well, although the latest soothing assurances have had a limited market impact. Next month’s APEC summit is likely to feature a face to face meeting between the two – and therefore a possible occasion for signing a partial deal. Economic Advisor Larry Kudlow said that planned tariff increases for December – which would hurt US consumers – could be dropped. The data calendar picks up today, with Existing Home Sales and the Richmond Manufacturing Index due out at 15:00 BST, followed by monthly Federal Budget data later in the day.


The loonie continued to rally yesterday and news came in overnight that incumbent Prime Minister Trudeau is set to maintain office, albeit with reduced representation in Parliament. At current, Trudeau’s Liberal party is leading in 156 seats, just shy of the 170 needed to hold a true majority, forcing a likely minority or coalition government with the liberal New Democrat Party. Both have similar stances on carbon tax, increasing the tax free bracket for those with incomes less than C$147,000, and a similar stance on running a reduced budget deficit but deficit nonetheless. Increased fiscal expenditure bodes well for a surging Canadian economy and has helped the loonie gain some marginal ground overnight. While it is too early to suggest a formal coalition is in the making, Canadian politics bodes a track record of minority governments instead. A minority government suggests Trudeau may have to increase spending to pass other legislation, but minor concessions to the NDP will likely allow the smooth functioning of government. Further stimulus for the loonie will be in the detail of this budding liberal relationship over the coming days and how much additional fiscal easing will be needed.


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