Sterling’s rally and the Brexit process took a pause last night after Parliament rejected the timetable motion to expedite the legislative process despite Johnson’s deal holding a non-binding majority in the House. The defeat on the timetable motion means the October 31st deadline will almost certainly be missed. The government will likely opt for the route of an extension and a general election, which is also constrained by the Christmas period rapidly approaching, but also it is unclear whether the EU will grant the extension request under the Benn Act too. The EU could in fact opt for a “flextension” whereby the UK could leave before the requested January 31st extension date should it ratify Johnson’s deal. Alternatively, a longer extension could be granted. Sterling sold off  0.68% over the course of yesterday and remains on the back foot this morning as optimism of express delivery for Brexit is slashed. This means Westminster is back in full election mode today, with Prime Ministerial Questions at 12:00 BST. All eyes will be on opposition leader Jeremy Corbyn and whether he will finally pull the trigger on a general election. Previously Corbyn withheld from calling a fresh election, despite Boris Johnsons multiple attempts to gain a ⅔ or even a simple majority in Parliament for an election date to be set this year, until an extension that prevents a no-deal exit is achieved. With the EU likely to grant this, the question will be whether the UK electorate should expect to sharpen their pencils this afternoon.


The euro was pushed down yesterday predominantly by broader USD strength as the news flow focused on crunching the numbers from Mario Draghi’s tenure as ECB President. While inflation remains lacklustre and forced him into pushing for a last-ditch attempt to boost price pressures with the resumption of QE in September, employment growth is a much more positive story. The Eurozone economy has added almost 10m jobs since Draghi’s term began in 2011. The data calendar for the euro is light today ahead of tomorrow’s PMI releases and ECB rate decision. This morning, the Financial Times Trade Secrets newsletter breaks an exclusive interview with US Trade Secretary Wilbur Ross. Ross stated that the Trump administration could choose “some other form of negotiation” as a path to avoid automotive tariffs on the EU next month. The Trump administration has yet to pull the trigger on car tariffs thus far, with Republican allies posing strong resistance to this measure. This will be a key source of stress for the single currency, and negative developments will undoubtedly weigh on EURUSD.


The US dollar broadly strengthened yesterday, losing out to only the Kiwi and Canadian dollar, as markets risk-on sentiment began to fade under the Brexit breakdown and no positive US-China headlines. The greenback has carried on in the same vein this morning. The data calendar is empty for the US today, but investors will be wise to keep a close eye on Donald Trump’s twitter account after he initially deemed the deal as good news. There’s still a bit of discrepancy in the market when it comes to pricing geopolitical risk with little in the way of US-China trade news.


The loonie struggled to hold onto all of its post-election gains yesterday as the greenback went on a tear. Yesterday also saw the release of the Bank of Canada’s third-quarter business outlook survey. The report showed Canadian business sentiment marginally improve from 0.2 to 0.4 on healthy spending plans, while future sales optimism remained. The survey marked the last piece of communication from the Bank of Canada before their rate decision on October 30th and confirmed the healthiness of the economy that has led to markets pricing a rate cut by the BoC as infinitesimal at 4%.


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