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XE Morning Update - Oct 28

The NZD opens at 0.6346

Last Friday was relatively a quiet day in the market but a little bit of steam came off the risk-on sentiment with USD raining back some of its losses last week towards the end of trading week.

Investors are keeping their eyes open to Brexit related news especially if (or for how long) an extension of the deadline will be given to the UK. If the extension is not granted, there will be an increased chance for the UK to face a ‘no-deal’ Brexit. The deal reached between UK PM Boris Johnson and the EU bloc will not go ahead without the extension and EU stays firm with their stance that there will not be renewed negotiations. GBP has fallen ‘only’ slightly on the back of this, suggesting the expectation of the hard Brexit on the current deadline day is relatively low.
Boris Jonson won the first Parliament vote on support for the exit deal 329 to 299 then lost the second 308 – 322. There will be another vote taking place Tuesday UK time.

This week is full of market-moving data and events so the volatility is expected to pick the up pace. Starting with the UK parliament vote, Q3 GDP from several countries (US, Canada, France, Spain, Italy), US non-farm monthly employment data, US FOMC rate decision, Bank of Canada Rate announcement and Brexit deadline. There will be also New Zealand Business Confidence and Chinese and Manufacturing index towards the end of the week.

The US Fed is widely expected to cut their interest rate by 25 bps this coming Thursday but more focus will be on if they will ease the policy further or sit tight and see if the economic data and more details on US – China trade deal will support their view.

Liquidity on NZD is expected to be thinner today due to Labour Day long weekend.

Global equity markets are mostly up with Dow +0.57%, S&P 500 +0.41%, FTSE -0.05%, DAX +0.17%, CAC 40 +0.67%, Nikkei +0.22%, Shanghai 0.48%

Gold prices are little changed at $1,504.63 an ounce. WTI Crude Oil prices are up a similar amount, now trading at $56.66 a barrel.

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