Volatility in major currencies remains subdued although the Dollar has appreciated slightly in today’s session. The exception is the Kiwi Dollar which has made small incremental gains, with NZD/USD having edged higher to 0.642 – within touching distance of a 6-week high. There have been very few tier-one macro data releases so far this week, giving markets little to latch onto. This is due to change tomorrow, with Eurozone PMI data for October due for release and the ECB holding its policy meeting – the last one under the presidency of Mario Draghi who will step down on 31st October. The Euro could be buffeted but with the ECB not expected to make any major policy announcements, markets’ attention is likely to gradually turn to the more important Federal Reserve policy meeting on 30 October.
Brexit is now effectively in limbo with the European Council expected to announce a 3-month delay to Article 50 negotiations to 31st January 2020. However, the UK could still leave the EU before that date if parliament approves the Withdrawal Agreement Bill. Prime Minister Johnson had said he would look to call a general election, in a bid to increase his party’s parliamentary majority and his chances of getting a Brexit deal approved, but he has in the past 24 hours seemingly shelved this plan.
