Dollar/CAD bounced off trend-line support in the 1.3070s overnight as some pre Withdrawal Agreement Bill vote jitters saw GBP sales lead the broader USD higher. Canada just reported its Retail Sales figures for the month of August and the numbers missed expectations: -0.1% MoM vs +0.4% and -0.2% MoM vs +0.1% ex Autos. This is now causing the market to break above yesterdays support (now turned resistance) at the 1.3100 level. The next chart resistance levels come in at the 1.3130s, the 1.3150s, and then the 1.3180slevels that could come into play should the Bank of Canadas Q3 Business Outlook Survey disappoint at 10:30amET this morning. Justin Trudeau hung on to a second term in office during the Canadian elections last night, but now with a Liberal minority government that will likely need support from the NDP. All this was largely expected by market participants though during the campaign and so last nights results were largely a non-event for USDCAD.
DEC CRUDE OIL DAILY
Euro/dollar is testing the lower bounds of a trend-line support channel in the 1.1130-50s this morning after yesterdays failed attempt by traders to close the market above chart resistance in the 1.1160s. Traders have reason to pause here in our opinion, with Boris Johnsons Brexit Withdrawal Agreement Bill vote, German October flash Manufacturing PMI and the ECB meeting all looming over the calendar for the next 48hrs.
DEC GOLD DAILY
Sterling is backing up a bit this morning as traders hedge the possibility of Boris Johnson pulling his Brexit Withdrawal Agreement Bill altogether today. While the UK government insists that it has the numbers (of MPs) to get this legislation through Parliament, it has threatened to scrap the legislation all together if opposition MPs start adding amendments (ie. stay in the EU customs union and/or 2nd referendum) that would force it to go back to the EU and the UK public. Seeherefor a great summary of the last 72hrs in Brexit from Vox.com. Voting is expected to begin around 2pmET, with EU leaders looking on closely. UK lawmakers will first vote on the Withdrawal Agreement Bill and then on the governments three-day timetable for approving the legislation.
The Australian dollar stalled at the 0.6880s in early NY trade yesterday when EURUSD receded back below the 1.1160s, and the market has failed on two occasions since then to break above it. We think this negative technical development was reason enough to invite sellers back in during European trade this morning, but we dont think this will be the start of any serious selling given last weeks bullish upside breakout in AUDUSD. RBA Assistant governor Christopher Kent will be making a speech at 6:20pmET tonight.
Dollar/yen had a quiet overnight session as Japanese markets were closed for the Core Enthronement Ceremony holiday. US 10yr yields are falling back this morning as bond traders prepare for the event risk of the day (Brexit vote). USDJPY remains largely trapped in a 108.50-108.80 range trade that has persisted since Thursdays failed upside breakout attempt into the 109 handle.
US 10YR BOND YIELD DAILY
Charts: Reuters Eikon
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