Global Market Watch - 18th October 2019
Sterling hit fresh 5-month highs yesterday in volatile trading, after the UK and the EU agreed on a new Brexit deal. The deal will now be put to Parliament on Saturday, and traders are trying to estimate how many votes of support the deal will attract. The DUP rejected the deal yesterday, so it looks difficult for PM Johnson to get the 320 votes needed to pass the deal. However, it could be very close, with some analysts forecasting that Johnson will fall short by just a handful of votes. On the plus side for sterling, even if the deal is rejected tomorrow, the risk of a no-deal Brexit has diminished considerably. Traders had worried that a Boris Johnson's victory in a snap election could lead to a no-deal Brexit, but this looks much less likely now that a deal is on the table.
The euro also benefitted from the agreement of a Brexit deal, and EUR/USD is trading near 2-month highs.
It’s a quiet day on the data front, but we do have some Fed speakers ahead of the Fed’s blackout period starting tomorrow. Markets see the chances of a US rate cut on October 30th at around 85%.
US Vice President, Mike Pence, agreed on a ceasefire with Turkey over the cross-border attack in Syria, which reduced tensions. Meanwhile, data showed that Chinese GDP growth came in at 6%, which is a 30-year low.