UK Supreme Court rules suspension of UK parliament was unlawful
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SUMMARY
ANALYSIS
USDCAD
Dollar/CAD is re-challenging familiar trend-line support in the 1.3240s this morning as rallies in pound sterling and the Aussie lead the US dollar broadly lower. With nothing notable on the Canadian and US economic calendar today aside from some 2nd tier US data out at 10amET (US Consumer Confidence for September), we think USDCAD will follow the broader USD trend. The next major support level in USDCAD lies at the 1.3220s. October crude oil prices continue to meander in the 57.90-58.70 range today as traders await the weekly API oil inventory report at 4:30pmET.
USDCAD DAILY
USDCAD HOURLY
OCT CRUDE OIL DAILY
EURUSD
Euro/dollar traders are fighting to get the market back above a trend-line support channel in the 1.0980-90s this morning after Germany reported mixed IFO survey results for the month of September. While the headline Business Climate component narrowly beat expectations (94.6 vs 94.4), the Expectations sub-index came way below expectations at a new 10yr low (90.8 vs 91.8). It appears the rally in GBPUSD this morning and some looming option expiries above the market are having more of an effect on EURUSD than anything else. Over 2.4blnEURs in options go off the board between the 1.1000 and 1.1030 strikes this morning at 10amET.
EURUSD DAILY
EURUSD HOURLY
DEC GOLD DAILY
GBPUSD
The pound has perked up over the last few hours after the UK Supreme Court ruled that Boris Johnson’s prorogation of parliament was unlawful. This doesn’t change a thing with regard to the sad state of Brexit negotiations with the EU in our opinion, but the market seems to want to celebrate all of Boris Johnson’s defeats lately and today’s ruling technically reduces the PM’s chances of forcing through a no-deal Brexit. The Speaker of the House, John Bercow, has just re-called parliament back into session for tomorrow at 6amET. So what could happen now? See more here from the UK's Metro. We’ll be focused on the 1.2470-1.2505 range for NY trade today.
GBPUSD DAILY
GBPUSD HOURLY
EURGBP DAILY
AUDUSD
The Aussie is getting a lift from Phillip Lowe this morning, after the RBA governor said the Australian economy had reached a “gentle turning point”. “While we are not expecting a return to strong economic growth in the near term, we are expecting growth to pick up”, said Lowe. Full text of his speech here. While there was plenty of dovish rhetoric in the speech (ie. risks from the global economy, US/China trade dispute, weak household consumption, extended period of low interest rates required), traders seem to be focusing on Lowe’s half-hearted optimism here. The OIS market has now reduced the odds of an October 1st rate cut down to 62% from 81% yesterday. AUDUSD has regained the key 0.6780s chart level that support prices last week and resisted prices yesterday. We’re not so sure how long this lasts though.
AUDUSD DAILY
AUDUSD HOURLY
USDCNH DAILY
USDJPY
Traders managed to close dollar/yen above the 107.50 mark in late NY trade yesterday, and it seems this technical development invited some buyers back in during the Asian and early European session. However, global bond yields look under pressure again here to start NY trade today (with US 10s falling back below 1.70%) and we think that’s why we’re seeing USDJPY fail at trend-line chart resistance in the 107.70s once again. Repo markets are back in focus too after the GC overnight rate opened at 2.10% this morning (10bp above the Fed funds target ceiling of 2%) and the NY Fed’s first term repo (14-day) operation came in over 2x oversubscribed (62blnUSD tendered vs 30blnUSD offered). BOJ governor Kuroda expounded on the virtues of negative interest rates earlier today, but his comments didn’t seem to have much of an effect on the market. More here from Bloomberg.
USDJPY DAILY
USDJPY HOURLY
US 10YR BOND YIELD DAILY
Charts: Reuters Eikon
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