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Tusk: EU to decide on Brexit extension in the coming days

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    European Commission President Jean-Claude Juncker complained that “in truth it has pained me to spend so much of this mandate dealing with Brexit when I have thought of nothing less than how this union could better do for its citizens – waste of time and waste of energy,”

    He added, “we need now to watch events in Westminster very closely, but it’s not possible, not imaginable that this parliament would ratify the agreement before Westminster has ratified the agreement. First London, then Brussels and Strasbourg”.

    European Council President Donald Tusk said today that he was already discussion UK’s Brexit extension request with E27 leaders. And decision would be made “in the coming days”. He added that “a no-deal Brexit will never be our decision.”

    China said it won’t decouple from the development of international industries

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      China Ministry of Industry and Information Technology (MIIT) spokesman said “we will look at the trade friction between China and the United States with an open mind and a big heart.” And, “we will not blindly emphasize ‘self-reliance’, and not decouple from the development of international industries.”

      Separately, Vice Foreign Minister Le Yucheng said that “as long as we respect each other and seek equal cooperation, there are no disagreements that cannot be resolved between China and the United States.” He also emphasized, “What China wants is to deliver a better life for the Chinese people. We don’t want to take anything from anyone else. There’s no such thing as China replacing anyone or threatening anyone.”

      UK Commons to hold second reading vote on Brexit bill

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        UK Prime Minister Boris Johnson’s Brexit deal will come back to the Commons on Tuesday, after twice being denied a vote. A vote on Second Reading, the general principle of the Withdrawal Agreement Bill, is expected to be held at around 1900GMT. After that, a vote on Program Motion will be held shortly after, for the timetable for the bill’s passage.

        The first vote would be the real moment of truth for Johnson. If he’s defeated there, the bill is dead. Though, it’s currently generally believed that Johnson would get a very narrow win. The second vote is about the timing of Brexit. The government is trying to push through a Third reading this Thursday, so as to meet the Oct 31 Brexit deadline. It’s highly doubtful if MPs would support this accelerated schedule. If not, another Brexit delay is inevitable.

        CAD Edges higher as Trudeau’s Liberal projected to win election with minority

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          Canadian Dollar strengthens mildly as polls suggest that Justin Trudeau’s Liberal Party is on track to a narrow win over Conservatives in federal elections. CBC News projects that the Liberals would take over 140 seats and less than 120 for Conservatives. Though, as 170 seats are needed to take majority in the 33-8 House of Commons, Trudeau’s minority government will need to seek support from left-leaning opposition parties.

          CAD/JPY edges higher today and it’s now eyeing 83.23 resistance. Sustained break there should confirm completion of the corrective pull back from 85.23 at 78.50. Rebound from 76.61 low should then be ready to resume through 85.23 resistance.

          Trump: China has started farm purchases, trade deal coming along very well

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            US President Donald Trump said yesterday that China has “started the buying” of US farm products” and he added “I want more”. Also, he repeated the usual rhetorics that “The deal with China’s coming along very well. They want to make a deal… They sort of have to make a deal … because their supply chain is going down the tubes.”

            Meanwhile, US Trade Representatives Robert Lighthizer indicated the administration is still aiming to finalize the first phase of US-China trade deal for signing at the APEC meeting in Chile on November 16-17. However, there are still outstanding issues to resolve. Deputy-level meetings took place yesterday. Lighthizer and Treasury Secretary Steven Mnuchin are expected to talk to Chinese Vice Premier Liu He on Friday.

            UK Commons speaker Bercow disallows another Brexit vote today

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              UK House of Commons Speaker John Bercow ruled that vote on Prime Minister Boris Johnson’s Brexit deal cannot take place today. Bercow cited a parliamentary rule dating back to 1604 under which the government cannot repeatedly ask Parliament to vote on the exact same motion.

              He said, “it is clear that the motions are in substance the same. My ruling is therefore that the motion will not be debated today as it would be repetitive and disorderly to do so.”

              US Ross: Trade deal with China doesn’t have to be in November

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                US Commerce Secretary Wilbur Ross emphasized that the US-China trade deal “has to be the right deal”, and “it doesn’t have to be in November”, referring to the APEC summit in Chile. He emphasized that “it’s more critical that it be a proper deal that exactly when it occurs.”

                Additionally, Ross said “The key think is to get everything right that we do sign. That’s the important element. That’s what the president is wedded to. Whether it’s this day or that day might be interesting to the media, but it isn’t the real game.”

                UK Johnson to push “yes or no” meaningful vote on Brexit deal

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                  UK Prime Minister Boris Johnson is pushing for a “yes or no” meaningful vote on his Brexit deal today. His spokesman said “The meaningful vote will go ahead if the speaker allows it and if no amendments are selected which would render the vote pointless. There is not point having a meaningless vote, the government would pull the motion”.

                  He added: “The public want Brexit done. The government is determined to pass the PM’s great new deal and get us out of the EU on Oct. 31 … The deal with the EU has just been agreed, it is done, it is closed”. “The negotiations with the EU have already gone on far too long. The prime minister has achieved what is a very good deal and he is focused on getting that deal through parliament.”

                  Bundesbank: Few signs of sustainably recovery in exports and stabilization of industry

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                    In its monthly report, Germany’s Bundesbank said “Germany’s economic output could have shrunk again slightly in the third quarter of 2019”. And, “the decisive factor here is the continued downturn in the export-oriented industry.”

                    Bundesbank doesn’t expect an outright recession. It still warned, “early indicators currently provide few signs of a sustainable recovery in exports and a stabilization of the industry.” “This raises the risk that the slowdown extends to a greater extent to more domestically oriented sectors.”

                    AUD/JPY and NZD/JPY rise on strength in treasury yields

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                      Yen is generally under pressure today and sentiments improved on Brexit optimism. While the reactions in the stock markets are relatively mild, recent rally in treasury yields are impressive. German 10-year yield is currently up 0.032 at -0.347, comparing to -0.739 low made back in September. Japan 10-year JGB yield is up 0.015 at -0.135, comparing to -0.284 low made back in September too.

                      AUD/JPY breaks 74.49 resistance today, resuming whole rebound from 69.95. Such rise should extend higher as long as 73.95 resistance turned support holds. Next target is 100% projection of 69.95 to 74.49 from 71.73 at 76.27.

                      NZD/JPY is lagging behind slightly. But further rise is expected as long as 69.00 minor support holds. Break of 69.68 resistance will resume the rebound from 66.31. Next target is 100% projection of 66.31 to 69.68 from 66.93 at 70.30.

                      Sterling jumps as Johnson said to have enough vote for Brexit deal

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                        ActionForex.com
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                        Sterling rises again today, apparently on renewed optimism over orderly Brexit. UK Prime Minister Boris Johnson will try to push his Brexit deal to a vote in the Commons today. Speaker John Bercow might decide to disallow and unamended bill without extension. Yet, the government could still reintroduce the bill with article 50 extension. But after all, the votes that Johnson could set is what matters most.

                        According to Guardian’s analysis, 320 MPs could vote for the deal, versus 317 again. Johnson appears to have secured support from all of his 287 MPs. He is said to have support from 20 former MPs too, plus 5 independents and 8 Labour rebels. ERG chair Steve baker also indicated that “The advice I gave to my Eurosceptic colleagues is we should, number one, back the deal,” he said. “Number two, vote for the legislation all the way through unless, it has to be said, it was wrecked by opponents, in which case we would have to take a view.

                        Chinese VP Liu said substantial progress made for a phased US-China trade deal

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                          Chinese Vice Premier Lieu He said on Saturday that US and China have made “substantial progress in many fields” in trade negotiations earlier this month. And, that laid an “important foundation for the signing of a phased agreement”. He added that “China and the US can meet each other half way, based on equality and mutual respect, addressing each other’s core concerns, striving to create a good environment and achieving both sides’ common goals.”

                          It’s believed that teams from both sides are working towards the deadline of APEC meeting in Chile on November 16-17. Presidents from both countries could make use of the opportunity to side the phase one of the trade agreement. However, at this point, intellectual property protections, currencies and financial services are expected to be covered. But the depth of the agreement is uncertain. Some speculated that it could be “super light” for rebuilding trust first.

                          Lagarde: ECB negative rates hasn’t hit bottom yet

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                            Incoming ECB President Christine Lagarde talked about the challenges to the global economy in the CBS News “60 Minutes” program. She warned that US President Donald Trump has “many keys” that would “unlock the uncertainty of the risks”. The biggest key was in relation to “predictability and, and certainty of the terms of trade”. Also, she emphasized “market stability should not be the subject of a tweet here or a tweet there. It requires consideration, thinking, quiet and measured and rational decisions.”

                            Europe is facing increasing fears of recession, as led by slump in manufacturing. And the room for more monetary stimulus by ECB is very limited, given that rates are already negative. Lagarde said “there’s a limit to what central bankers can do. There’s a limit to how far and how deep you go into negative territory.” However, she added, “There’s a bottom to everything, but we’re not at that bottom at this point in time.” The interview was done in September though.

                            Sterling mildly lower as UK seeks another Brexit extension

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                              ActionForex.com
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                              Sterling opens the week mildly lower but loss is so far very limited. The House of Commons voted on Saturday to withhold the decision on UK Prime Minister Boris Johnson’s Brexit instead. Instead, MPs forced Johnson to seek another three-month extension from EU first. While initially refused, Johnson eventually sent a delay request to EU, without signing it.

                              At this point, it’s generally viewed that UK is still on track for orderly Brexit, just deferred. The vote on the Withdrawal Agreement Bill could still be held on Tuesday, after Johnson makes another attempt on Monday to get Parliament to sign off on the principle of his deal. And, if Johnson wins, the extension request could be withdrawn and Brexit will happen on October 31.

                              The Times of London reported that EU is ready to approve a three-month flexible extensions. UK could leave EU earlier if the Parliament could ratify a deal. Or, Germany could push for a longer extension, pushing the deadline well into June 2020, if the UK government meets are serious obstacles.

                              The UK government activated the so-called “Operation Yellowhammer” on Sunday, entering the “final, most intensive stage” of disorderly Brexit preparation. Quoted by Bloomberg, a government official said, “with less than two weeks until 31 October, hundreds of civil servants will from today move to work on these operational matters.”

                              UK Johnson forced to seek Brexit delay after losing Letwin amendment

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                                ActionForex.com
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                                UK Prime Minister Boris Johnson’s effort to end Brexit drama failed, at least for now, after suffering humiliating defeat in the House of Commons today. MPs passed an amendment tabled by former Conservatives Minister Oliver Letwin by 322 to 306. Under the amendment, the so-called Benn act was trigger that forces Johnson to seek Brexit extension through January 31, 2020. And, the meaningful vote on the Brexit deal wouldn’t be held today. Johnson said immediate that he will not negotiate a further delay with the EU. But in doing so, he could in the end face being held in contempt of court.

                                Meanwhile, Europe Commission spokesperson quickly said “The European commission takes note of the vote in the House of Commons today on the so-called Letwin amendment meaning that the withdrawal agreement itself was not put to vote today. It will be for the UK government to inform us about the next steps as soon as possible.”

                                The Pound, and other European majors, might suffer some setback as the week opens. But Johnson is generally expected to concede and seek a delay. And EU is not expected to reject it despite all the hassles. Thus, any setback could be temporary. And the guesses on whether Johnson would get enough votes for his deal would continue.

                                ECB Holzmann: It needs too much liquidity to reach inflation target

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                                  ActionForex.com
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                                  ECB Governing Council member Robert Holzmann said “in an environment of highly fixed inflation expectations, it becomes too expensive and difficult to reach the (inflation) target, you need too much liquidity to do it.”

                                  And, “even if you can reach it, it’s useful to think of a lower target, which could be 1.5%, which is my preference. But if somebody said 1.2%, I would not say no either.”

                                  Fed Clarida: Baseline outlook favorable but economy confronts some evident risks

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                                    Fed Vice Chairman Richard Clarida reiterated that looking ahead, “monetary policy is not on a preset course”. FOMC will “proceed on a meeting-by-meeting basis to assess the economic outlook as well as the risks to the outlook.” Also, Fed will “act as appropriate to sustain growth and achieve dual mandate.

                                    Clarida also repeated that the economy is “in a good place” and the “baseline outlook is favorable”. But the economy “confronts some evident risks”. In particular, he noted, ” Business fixed investment has slowed notably since last year, exports are contracting on a year-over-year basis, and indicators of manufacturing activity are weakening. Global growth estimates continue to be marked down, and global disinflationary pressures cloud the outlook for U.S. inflation.”

                                    Clarida’s full speech here.

                                    Kaplan: Fed not in full-fledged rate cutting cycle

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                                      ActionForex.com
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                                      Dallas Fed President Robert Kaplan said that the US is not yet heading into a “full-fledged rate cutting cycle”. He said “the debate we are having around the table is, there is a risk that slowing global growth and weak business investment” is moving beyond manufacturing and capex. On the other hand, “consumer is strong” and is expected to continue, even though it’s “fragile”.

                                      Kaplan added, “We therefore took action in July and took action in September. I don’t view this as starting a full fledged rate cutting cycle … But it is appropriate to adjust the stance of monetary policy in a more limited, restrained way.”

                                      FT predicts Johnson’s Brexit deal to be defeated by 318 to 321

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                                        ActionForex.com
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                                        Sterling remains steady today as traders are all holding their bets ahead of tomorrow’s crucial vote on the new Brexit withdrawal agreement. UK Prime Minister Boris Johnson will hold a cabinet meeting at 1500GMT in Downing Street today, in effort to secure support for the bill. At this point, there is no sign that Northern Ireland’s DUP is changing their stance against the plan. ERG chair is holding the cards on his chest. The group is due to meet tomorrow and make a recommendation but Guardian reported that most of the “Spartans” are likely to support. Labour MP John Mann has predicted that “more than nine” of his parliamentary colleagues will vote for Johnson’s deal

                                        Financial Times predict that Johnson’s deal would be voted down by 318-321. The possible supporters include 259 Conservatives, 28 hardline Eurosceptic Conservatives, 20 independent Conservatives, 7 Labour rebels, 3 independents and 1 Lib Dem. The reported noted: “Analysis by the Financial Times suggests that unless the prime minister can persuade the DUP to drop its opposition, or persuade several Labour MPs or independent parliamentarians to support the deal, Mr Johnson will struggle to win a House of Commons majority.”

                                        China GDP growth slowed to 6% in Q3, worst since 1992

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                                          ActionForex.com
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                                          China’s GDP growth slowed further to 6.0% yoy in Q3, down from 6.2% yoy in Q2 and missed expectation of 6.1% yoy. That’s also the worst pace since Q1 of 1992, the earliest quarterly data on record. National Bureau of Statistics spokesman Mao Shengyong said China was ” faced with mounting risks and challenges both at home and abroad”. But he attempted to tone down the situation and said ” the national economy maintained overall stability … and improved living standard.” He also added there was ample room for adjustments on monetary policy,

                                          The weak data raised concern that the slowdown this year could be worse than originally expected, as trade war with US weigh. While there appears to be some progresses on trade negotiations, the imposed tariffs are remaining. Uncertainties continued to weigh on business sentiments too. Growth could slow further below 6% handle in Q4.

                                          Nevertheless, on the positive side, industrial production grew 5.8% yoy in September, comfortably beat expectations of 5.0% yoy. That’s also a notably improvement from 4.4% yoy in August. Retail sales growth accelerated to 7.8% yoy, up from 7.5% yoy and matched expectations. Fixed asset investment, however, slowed to 5.4% ytd yoy, down from 5.5% and matched expectations.

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