CAD
Despite a limited domestic data calendar, USDCAD continued to grid higher on Tuesday once again. We would be surprised if this move does not continue to extend today too, with Q3 labour productivity and PMI data due for publication. Given our longstanding view on the Canadian economy, we fully expect the former to print in negative territory. The latter meanwhile is likely to see a significant sentiment hit from the election of Donald Trump, in keeping with readings seen elsewhere. All told, and assuming we are right, we think that USDCAD should end the day retesting 1.41.
USD
While not normally a headline feature in our morning report, events in South Korea caught markets by surprise yesterday, with news that President Yoon Suk Yeol had imposed martial law. Unsurprisingly, this sent the won into a tailspin, falling close to 3% against the dollar at one point, while the yen picked up a notable haven bid as traders digested these developments. That said, the excitement appears to have been short-lived. Korean lawmakers reversed the martial law declaration within hours, leading to a retracement from yesterday’s extremes. That also leaves the focus for today on events in France, and on the state of the US economy. While the former is likely to be the chief focus for traders (more on this below), in the US, traders will continue to parse Tuesday’s JOLTS data ahead of ISM services readings at 15:00 GMT, and the Fed’s Beige book19:00 GMT.
EUR
With events appearing to have calmed somewhat in Asia, France retains the spotlight regarding political drama. Indeed, the moment of truth for Michel Barnier comes later today, with the Prime Minister looking almost certain to lose a censure vote in parliament. If realised, the government will have to resign, throwing the country into turmoil. What comes next is an open question, but we have a hard time seeing the uncertainty as euro-positive, leading us to think that some EURUSD downside should be in store for this afternoon. Beyond this, A speech by ECB President Lagarde at 14:00 GMT is the other event of note for the day, albeit one that is likely to be overshadowed given the political backdrop.
GBP
Brits could be forgiven for looking on in bewilderment yesterday. For a change, the UK was not one of the countries where dysfunctional politics was at the centre of attention. This has seen GPEUR stabilise in the 1.20-1.21 range for now, albeit considering our expectations for events of the continent later today, we think a test of the top end could be on the cards for later this afternoon. Before then, an FT interview with BoE Governor Andrew Bailey is due for release at 09:00 GMT. With markets seeing little risk of a December rate, cut we doubt there is much he can do to upset sterling. Even so, we will be keeping one eye on his comments, just in case.
This content was originally published by our partners at Monex Canada.