Corpay^

Global Reach is becoming Corpay Cross Border, part of FLEETCOR, to broaden our client offering. Please contact our team or visit corpay.com to find out more.

The Brexit rollercoaster

GBP – Can Johnson's Brexit deal pass? 

Sterling had a rollercoaster week last week with Brexit pushing the currency back and forth. The British Pound advanced against the Euro while creeping to just below the 1.30 level versus the US Dollar--a five-month high--when deal optimism was at its brightest. After failing to gain approval at the weekend, today will see a second attempt for a meaningful vote on Boris Johnson's Brexit deal; however, this may be rejected. Later in the week, the Prime Minister said he would 'introduce the legislation needed for us to leave the EU with our new deal on 31 October.' However, opposition MPs could create some hurdles to the withdrawal agreement bill if they wish to amend it to include any provisions surrounding the EU single market or customs union, or even, another referendum. With Brexit coming down to the wire, Pound volatility could be a common theme in the market this week. 

EUR – Two-month highs 

The Euro strengthened against the US Dollar last week as improved Brexit sentiment boosted the common currency too. Markets hoped that a deal between the EU and UK could allow the Eurozone to pick up its pace of growth, and avoid a recession. The Euro has been pressured this year as manufacturing data disappointed, amid a backdrop of a trade warring US and China which have increased concerns that Eurozone economies would be hit. Thursday will see manufacturing and services data out of both the Eurozone and Germany, shortly before the European Central Bank announces its latest interest rate decision with a follow-up press conference. 

USD – Another rate cut?

The US Dollar softened last week, allowing both the Pound and Euro to climb against it. While Sterling reached five-month highs, the Euro rose to a two-month pinnacle. The US Dollar experienced weakness with markets forecasting a higher chance of an interest rate cut by the US Federal Reserve this month. The trade war between the US and China has damaged both economies. China's Yuan hit a 10-year low versus the US Dollar earlier this month after China's economic growth stumbled in the third quarter to the lowest level since the early 1990s. In the US, factories are struggling with the trade uncertainty too, and there's an increasing concern that the manufacturing slowdown could seep into the rest of the economy. High-tier US Durable Goods Orders data will be out on Thursday, as well as manufacturing and service sector data, which may move the US Dollar.

AUD and NZD – Staving off a rate cut 

The Aussie Dollar rose at the start of last week when labour market stats boosted hopes that data could stave off another interest rate cut by the Reserve Bank of Australia. Meanwhile, inflation in New Zealand has been slowing, and the Reserve Bank of New Zealand's next monetary policy steps remain elusive--another rate cut could occur as soon as next month, which could put significant pressure on the Kiwi currency. 

In the week ahead, New Zealand Trade Balance data could influence the Kiwi on Tuesday, while Wednesday's manufacturing and services data might influence the Aussie on Wednesday. Additionally, any developments in the US-China trade dispute could also influence the Trans-Tasman currencies as China is the Oceanic region's largest trading partner. 

CAD – The election looms 

It could be an interesting day for the Canadian Dollar with Canadian elections taking place. Justin Trudeau and his Liberal Party have been in power for four years, and some polls have suggested that the chances of another majority for the Liberals sits at around 21%, with Conservative Party leader Andrew Scheer a genuine threat. If no outright majority can be won, politics could become fragmented, a development which could make it more challenging to pass stimulative policies which could be needed if the global slowdown continues. It's a quiet week for Canadian data, with only Retail Sales stats worth noting on Tuesday, meaning the Loonie could be more susceptible to political and global developments.